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Gas tax, tolls rising in Maryland next week

ANNAPOLIS — The cost of driving in Maryland is going up next week.

The state’s first gas tax increase in two decades goes into effect, along with the second round of toll increases in less than two years.

In another step designed to build infrastructure, the deadline for 10 of the state’s most populated jurisdictions to implement fees for property owners for stormwater remediation to fight pollution in the Chesapeake Bay also is set for Monday.

While there will be no change to Maryland’s 23.5-cents-per-gallon excise tax, which was last raised in 1992, the state will begin applying a sales tax to a gallon of gas. Starting Monday, a 1 percent sales tax will be added to gas purchases in the first of several increases scheduled over the next few years. In another change, Maryland will begin implementing an automatic increase to gas prices that will be linked to the Consumer Price Index to adjust for inflation.

The changes will add about 3.5 cents to the price of a gallon of gas on Monday, with about 3.1 cents coming from the 1 percent increase and nearly half a cent from the indexing for inflation.

The sales tax is set to rise again by another 1 percent on Jan. 1, 2015, and another 1 percent on July 1, 2015. If federal legislation allowing states to collect a sales tax on Internet sales does not pass, the sales tax is scheduled to rise another 1 percent in January 2016.

Gov. Martin O’Malley, who unsuccessfully pushed for a gas tax increase last year, tried again this legislative session and won approval with the help of Senate President Thomas V. Mike Miller and House Speaker Michael Busch.

Supporters of the increase noted that after years of neglect, the state was scheduled to run out of money for new transportation projects after 2017 without new revenue. They also pointed to traffic congestion in the suburbs of the nation’s capital and Baltimore and concerns that Maryland would fall behind Virginia, which also approved new transportation revenues this year, to maintain and build roads to compete for jobs.

“You’ve got to regularly invest in transportation to address those congestion challenges and, eventually what happens, people become mired in gridlock, and from a business perspective we need to be able to move people, goods and services to have a vibrant economy,” said Don Fry, president of the Greater Baltimore Committee, said.

On the day O’Malley signed the measure into law last month, the administration announced more than $1 billion in highway and transit projects. The Democratic governor also underscored the new jobs that would be created by the additional construction.

Opponents, however, decried the increases. Del. Nic Kipke, the House minority leader, said the additional taxes will hurt businesses in a state where taxes were already high in general.

“Before all of these unnecessary tax increases to into effect, Maryland was already the fifth highest cost-of-living state in the nation, and I’m concerned these new costs just increase the hardship of lower and middle income people,” Kipke, R-Anne Arundel, said.

The toll increases taking effect Monday’s represent the second phase of such hikes approved by the Maryland Transportation Authority in 2011.

Drivers of two-axle vehicles will pay $2 more to cross the Chesapeake Bay Bridge, as the toll jumps to $6 from $4. Tolls for the Fort McHenry Tunnel, Baltimore Harbor Tunnel and Francis Scott Key Bridge will rise to $4 from $3 for two-axle vehicles. The toll for the Harry W. Nice Bridge will increase to $6 from $4. The cost of going through the one-way John F. Kennedy Memorial Highway at Perryville on Interstate 95 and the Thomas J. Hatem Memorial Bridge on U.S. 40 will jump to $8 from $6.

In addition to the gas tax and toll increases, the state’s 10 most populated jurisdictions are hitting a deadline Monday to set fees for stormwater remediation. However, differences in how the jurisdictions have been addressing the requirement have been considerable. For example, in Frederick County, local officials opposing the idea have set a penny annual charge. Other jurisdictions have set higher fees. Carroll County officials decided Thursday to use county money for the initiative instead of implementing a fee.

Republican opponents, who have derided the fee by calling it “the rain tax,” say they will push to repeal it next year. Kipke said Republican lawmakers have scheduled a Monday news conference to make the announcement and criticize the tax increases. Kipke said he is concerned the initiative will hurt struggling businesses, such as a mall in his county that he says will face hundreds of thousands of dollars in fees.

“There are countless stories like that where I fear this new costly fee will be the stake in the heart of employers in the state,” he said.