Motor Fuel Tax Increase Set to Take Effect, Funding $1.2 Billion in Road and Transit Projects

As previously reported on Conduit Street, legislation to increase the State’s gas tax passed during this past legislative session.  As reported by the Washington Post, the first increase in the gas tax is set to take effect on July 1, 2013.

Motorists, who now pay a state gas tax of 23.5 cents per gallon, will see that rise to 27 cents per gallon at the pump on Monday, according to the Comptroller’s Office.

The official calculations that have now been done by the Comptroller have resulted in a less onerous jump.

As a result of the legislation, the existing 23.5-cent tax, which has not changed since 1992, will start being adjusted annually to reflect the Consumer Price Index. That accounts for 0.4 cents of the 3.5-cents increase.

The remaining 3.1-cents rise is the result of a new sales tax that is being applied to gas in Maryland.

An article in the Gazette, provides some information on how the additional revenue will be used.

The tax increase, adopted by the General Assembly earlier this year, led Gov. Martin O’Malley (D) to approve $1.2 billion in funding for several road and transit projects. The package includes $125 million for an interchange at Interstate 270 and Watkins Mill Road, $280 million for the proposed Purple Line light-rail system and $100 million for the proposed Corridor Cities Transitway bus rapid transit system.

Additional projects will be announced later this year, leading up to the release of MDOTs new six-year capital budget for transportation projects in September, Brown said.

In addition to raising additional revenue for transportation, the bill creates a Task Force to study and make recommendations on the feasibility of creating regional transit financing entities and local-option transportation revenues. MACo anticipates Highway User Revenues to be a part of the group’s discussion.