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Some gas tax revenue could fund waterway protection

ANNAPOLIS — Senate Bill 90 started as a proposal to cap Maryland’s excise tax on boats at $10,000 a year, an act that proponents said would encourage more owners to register their vessels in the state.

By the time the Senate Budget and Taxation Committee was finished with it this week, the bill had become a mechanism for increasing the balance of the Waterway Improvement Fund by directing 0.5 percent of gas tax revenue into the account, which pays for dredging and other projects to keep Maryland’s waters healthy.

“The original intent was to encourage more people to register boats in Maryland,” said Sen. Richard F. Colburn, a Republican who represents the Middle Shore. “The amendments gut the bill.”

Members of the Budget and Taxation Committee voted to approve the amended bill Wednesday afternoon and quickly brought it before the full Senate, where it received preliminary approval — with no debate — on Thursday.

Some lawmakers said the bill was changed because Democrats in the legislature were worried about the political implications of offering a tax break to boat owners who might be wealthy. Others have a different theory.

Democratic Del. John A. Olszewski Jr. chairs Baltimore County’s House delegation. During one House debate on the gas tax increase, he offered an amendment that would have carved out a portion of the tax to go toward the Waterway Improvement Fund.

The amendment to House Bill 1515 was defeated 73-61, and Olszewski ultimately voted against the transportation funding legislation. In an interview Thursday, Olszewski said he suspected the Senate was pushing the amended version of S.B. 90 to prevent similar amendments from being presented going forward.

“It was an attempt to basically do what’s fair and what’s right,” Olszewski said of his amendment. “It’s not only fair, but right that we distribute gas purchases on the water toward the water.”

S.B. 90 and a similar bill capping the vessel excise tax in the House of Delegates were thought dead after the state Department of Natural Resources presented a study to legislative committees that showed capping the vessel excise tax would result in the Waterway Improvement Fund — funded exclusively by the excise tax — losing money. Proponents had argued the tax cap would lead to more boat purchases and registrations, resulting in a net increase to the fund.

Del. Ronald A. George, an Anne Arundel County Republican and sponsor of the similar House Bill, said the Senate panel’s amendments completely changed the intent of the legislation. He noted that Virginia has a $2,000 cap on vessel excise taxes, and that Maryland’s boating industry couldn’t compete with its flat tax of 5 percent on the value of a boat.

“The boating industry wants money in the Waterway Improvement Fund,” George said. “But unless you’re going to help the boating industry, it’s going to hurt the Waterway Improvement Fund.

Sen. John C. Astle, an Anne Arundel County Democrat who sponsored SB 90, said he was fine with the way Budget and Taxation changed his bill. He said members of the Budget and Taxation Committee consulted him first.

“For a long time, we tried to get money into the Waterway Improvement Fund,” Astle said. “It’s really changed, but I’m really happy they didn’t kill the bill.”