ANNAPOLIS, Md. — The Maryland Senate voted 27-20 on Friday to approve the state's first gas tax increase in just over 20 years, sending the measure to Gov. Martin O'Malley, who pushed the proposal earlier this month to raise badly needed revenue for transportation projects.
The measure puts a new 1 percent sales tax on a gallon of gasoline beginning in July, with added increases in coming years. It also includes a provision to raise the tax automatically to adjust for inflation by indexing it to the Consumer Price Index.
The price of gas will rise about 4 cents more a gallon in July. The sales tax would rise to 2 percent in January 2015 and 3 percent in July 2015. It could rise to 5 percent in 2016, if Congress does not approve a measure allowing states to charge an Internet sales tax. The top rate would add about 20 cents to the price of a gallon of gas to today's price, when increases for inflation are added.
The measure would net more than $660 million annually by fiscal year 2018, once new bonding capacity created by the additional revenue is added into the mix, according to state estimates.
All of the votes to pass the bill came from Democrats, while eight Democrats joined all 12 of the Senate's Republicans in voting against it.
O'Malley, a Democrat who pushed unsuccessfully for a 6 percent sales tax last year, said after the vote that funding for transportation in Maryland essentially has been capped since the current 23.5-cents excise tax on a gallon of gas was approved in 1992.
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Maryland is on track to run out of money for any new transportation projects after 2017.
"This allows us to attack some of the worst traffic congestion in the country and also to create jobs through the modern investments that a modern economy requires," O'Malley told The Associated Press in a brief interview after the vote.
Opponents, however, argued the tax increase would actually cost the state jobs. Sen. George Edwards, R-Garrett, noted that drivers in many parts of the state will be able to drive just over the state border to get gas elsewhere.
"We will lose a lot of jobs because truckers, particularly, will not have to stop in this state," said Edwards, whose district is close to West Virginia and Pennsylvania. "They'll go right through this state. They'll fill up in Virginia or Pennsylvania or West Virginia and say: 'Nice seeing Maryland while I'm cruising through here, I'll just keep right on trucking,' and that's what they're going to do."
Leaders in the state's business community have supported the measure, saying the state's businesses need the investment in infrastructure and to alleviate choking traffic congestion in the suburbs of the nation's capital. They also argued that Maryland needs to be competitive with Virginia.
Virginia GOP Gov. Bob McDonnell recently won approval for overhauling his state's highway maintenance system by raising diesel and retail sales taxes and creating a mechanism for a potential future gasoline tax hike.
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