FUNDING: With Va. looking at new tax plan, Md. scrambles to come up with new forms of transpo funding

Neighboring state also looking at increasing sales tax, but lawmakers are having a difficult time finding compromise

Funding News Baltimore Sun January 10, 2013
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With the state of Virginia toying with the idea of scraping the state gas tax in favor of a sales tax increase, neighboring Maryland is wondering what its next move should be.

 

Lawmakers in the state are already worried that if Virginia follows through on Gov. Bob McDonnell’s proposal that favors an .8% sales tax hike it will pull gas customers out of Maryland in favor of fuel that could be more than 20 cents a gallon less. Maryland’s Transportation Trust Fund is almost in a state of ruins, with no money to take on new capacity. Gov. Martin O’Malley said transportation funding was one of the top priorities during the first day of the General Assembly’s 90-day sessions earlier this week.

 

“I kind of agree with Governor McDonnell to the extent he says we should move away from a commodity like gasoline we’re hoping to use less and less of,” he told the Baltimore Sun.

 

O’Malley is looking at a 1-cent sales tax increase, but also has not ruled out the possibility of raising Maryland’s gas tax. Applying the sales tax to gasoline or indexing the current gas tax is other possibilities. O’Malley believes $700 to $800 million a year is needed alone to address congestion problems.

 

The two leaders of Maryland’s state legislature are at odds on what the next move should be. Senate President Thomas Mike Miller and House Speaker Michael Busch have argued over whether transportation taxes should vary by region based on the local need for transit services. Miller also does not think Virginia’s solution would work in Maryland.

 

“It wouldn’t raise a lot of money and it would be a very regressive tax,” he told the Sun.

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