Maryland’s top tax collector is urging Gov. Larry Hogan and Democratic legislative leaders to call a special session to address the largest gas tax increase in a decade.
Franchot’s letter comes a day after he and Hogan traded missives in which both men urged the other to take action to temporarily forestall the increase. In those messages, each leader claimed the other had legal authority to take action.
“After an exhaustive review of Maryland’s Tax Code and the State Constitution, our agency counsel has advised – and Attorney General (Brian E.) Frosh has confirmed to me personally – that I lack the statutory authority to halt or suspend the automatic increase to the motor fuel tax or any tax rate,” Franchot wrote in his letter, which was released to reporters. “Simply put, if I was legally able to prevent the motor fuel tax increase from going into effect, I would have done so already.”
There has been no response from House Speaker Adrienne Jones or Senate President Bill Ferguson.
Michael Ricci, a Hogan spokesman, maintained that Franchot has the legal authority to defer the tax based on other actions including delaying the payment of estimated taxes, extending the deadline for filing individual tax returns. Ricci provided a long list of similar examples.
In a 2011 letter to House Speaker Michael Busch and Senate President Thomas V. Mike Miller Jr., an assistant attorney general wrote that Franchot had discretion to defer the enforcement of a ban of online sales of premium cigars until the legislature reversed the inadvertent ban. The letter went on to say that even though Franchot could choose whether to allocate resources to enforce the law, he could not unilaterally suspend the online sales prohibition.
Such discretion likely only applies to what is essentially a prosecutorial power and not provide to the imposition or collection of fuel taxes.
Ricci said Franchot’s letter is “not a call (for a special session), it’s a deflection. I’m drowning in examples of him citing legal and regulatory authority to make these kinds of changes.”
Earlier this year, the trio reached an agreement on a gas tax holiday. Franchot initiated the discussion calling for a 90-day break. Hogan, who said he was open to a longer holiday, ultimately reached an agreement with Ferguson and Jones for 30 days. That period ended the same week the legislature adjourned the 90-day session.
Hogan said lawmakers resisted calls for an extension.
Without an agreement between the executive and presiding officers, a special session would likely be doomed. In 2004, Gov. Robert Ehrlich, also a Republican, called for a special session to address skyrocketing medical malpractice insurance costs to physicians.
But Ehrlich had no agreement with Busch and Miller, both Democrats, on a legislative solution. The legislature rejected Ehrlich’s proposal and passed its own. The governor vetoed it, only to see the Democratic super-majorities in the House and Senate override him.
Marylanders are already paying record gas prices that mirror the national average.
Those prices will increase on July when the gas tax — which is tied to inflation and other factors — will automatically increase.
Inflationary pressures over the last year will result in a 6.6-cents increase in the current 36.1-cents per gallon state excise tax. The increase “amounts to a new, highly regressive $200 million tax on Maryland families and small businesses,” Franchot wrote.
In the letter, the comptroller notes that a 2013 law requires him to determine and announce the inflationary and sales and use increases to the gas tax each June 1.
“Therefore, to definitively resolve this question and swiftly address this crisis, I am calling on you to convene a special session of the General Assembly before next Wednesday, June 1,” Franchot wrote to Hogan. “Emergency legislation passed during a special session of the General Assembly would be required to grant my office the statutory discretion we currently lack to temporarily suspend this new tax increase from taking effect. If I am granted legislative authority, I intend to temporarily suspend the enforcement of this provision of law for one fiscal year, from July 1, 2022 to July 1, 2023.
“As automatic increases to the gas tax are identified as revenue sources for bonds acquired to fund transportation projects, a temporary suspension – utilizing authority granted by the legislature – should not compromise our coveted bond ratings while providing relief to Marylanders.”