Comptroller Peter Franchot today sent a letter to Governor Larry Hogan, Senate President Bill Ferguson, and House Speaker Adrienne Jones urging them to convene a special session of the Maryland General Assembly to pass emergency legislation granting the Comptroller the authority to waive the 18 percent increase to the state gas tax, scheduled to be implemented on July 1.

The letter comes after Governor Hogan this week urged the Comptroller to minimize the impact of the automatic gas tax increase, which is tied to the consumer price index. The Comptroller’s Office insists it does not have the legal or regulatory authority to waive the fee increase.

According to the Comptroller’s Office:

At the request of the Governor, the Comptroller’s Office reviewed all available regulatory and legal powers to prevent the largest-ever increase — from 36.1 cents per gallon to 42.7 cents per gallon — from automatically occurring on July 1. For several days, staff and lawyers within the Comptroller’s Office have reviewed state law and determined that no statutory discretion exists for the Comptroller to take unilateral action. The Attorney General’s Office has concurred with this assessment.

While there appears to be continued disagreement between the Governor and my office – and the Attorney General’s interpretation of law – on whether or not I have existing authority to suspend the automatic increase to the gas tax set to go into effect on July 1, one thing is for certain: the executive and legislative branches have unquestionable authority to prevent an 18% increase to the gas tax – from 36 cents to 43 cents – from taking effect,” Franchot wrote in the letter. This amounts to a new, highly regressive $200 million tax on Maryland families and small businesses.

Maryland Fuel Taxes

Motor fuel tax rates are indexed for all fuels, except for aviation or turbine fuel, to the annual change in the consumer price index — which measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Motor fuel tax rates will increase annually if the Comptroller’s Office determines that the CPI has increased over the past year.

The increase equals the percentage growth in the CPI multiplied by the motor fuel tax rates, rounded to the nearest one-tenth of one cent. Motor fuel tax rates will remain unchanged if the CPI stays flat (or decreases).

Why Does Maryland Index Fuel Taxes?

Legislation Establishing Consumer Price Index Adjustment The Transportation Infrastructure Investment Act of 2013 (Chapter 429) substantially increased revenues available for transportation projects, primarily by increasing motor fuel taxes.

Chapter 429 altered motor fuel taxes specifically by:

• Indexing motor fuel tax rates, except for aviation and turbine fuel, to inflation beginning in fiscal 2014
• Imposing a one percent sales and use tax equivalent rate on all motor fuel, except for aviation and turbine fuel, beginning in fiscal 2014 and increasing in several steps to five percent starting in fiscal 2017

Stay tuned to Conduit Street for more information.