Waterway Project Funding Triggers Tax Shifts

As previously reported, efforts had been derailed to provide additional revenue for the Waterway Improvement Fund through the Transportation Infrastructure legislation and a separate bill, HB 1210.  The Waterway Improvement Fund, which is administered by the Department of Natural Resources (DNR),  provides financial support for local governments, federal agencies, and DNR for capital projects and services for the boating public. Although these efforts failed, more recent action has been taken on SB 90 to provide motor fuel tax revenues for this purpose.

As originally introduced, SB 90 would have limited the amount of the vessel excise tax to no more than $10,000 for any vessel purchased.  Proponents argued that imposing the cap would incentivize boat sales and generate more revenue for the fund. MACo opposed this legislation expressing concerns that this approach would reduce funding for the Waterway Improvement, which has over a $50 million back log in projects.  The bill, as amended by the Senate, seems to have provided an avenue to achieve both of these purposes.  As reported by the Capital- Gazette:

Last week, it seemed as though the tax cap had been defeated. SB 90 was converted into a measure to put 0.5 percent of cash from the motor fuel tax into the Waterway Improvement Fund, which funds dredging and other projects intended to keep the state’s waters healthy.

All of the bill’s original language, including a proposed $10,000 tax cap, was struck from the bill.

But with the extra cash for the Waterway Improvement Fund, it seems the Department of Natural Resources has backed off on its previous contention with the bill. DNR had for years opposed a cap because it argues that the revenue going into the Waterway Improvement Fund would be reduced by the loss of the money put in by the owners of large yachts.

Now, SB 90 will put 0.5 percent of cash from the motor fuel tax to the fund and cap the vessel excise tax. The $15,000 cap would be put into effect and the move would be revisited three years from now to see how it benefited the state.