Lawmakers accelerating gas tax plan Prices would rise 6 cents a gallon beginning April 1

February 08, 1992|By John W. Frece | John W. Frece,Annapolis Bureau

ANNAPOLIS -- House and Senate leaders, unable to agree on a solution to Maryland's long-range budget problems, decided instead yesterday to push for a quick fix of this year's deficit by raising the gas tax this spring.

At a closed meeting, the lawmakers tentatively agreed to push for quick passage of a measure extending the state's 5 percent sales tax to the pump price of gasoline. It would generate $122 million in new revenue over the course of a year.

The plan would add about 6 cents a gallon to the price of gasoline. A driver who travels 12,000 miles a year in a car that gets 20 miles per gallon would pay about $36.

Unlike most tax increases, which take effect July 1, this one would start April 1. The proceeds collected during the final three months of this budget year would help offset the fiscal 1992 deficit, estimated at $225 million.

The bill could begin to move in the House within the next two weeks, one delegate suggested.

While they agreed on a short-term fix, the legislature's fiscal leaders gave up on a marathon effort to reach an early consensus on a plan to deal with next year's deficit, which could reach $1.2 billion if lawmakers don't cut spending, raise taxes or both.

Senate leaders wanted an increase in the 5 percent sales tax rate, while House leaders and Gov. William Donald Schaefer wanted to leave the rate alone and extend the tax to services that aren't covered now, such as dry cleaning or auto repairs. After months of meetings, hearings and closed-door negotiations, frustrated lawmakers conceded the stalemate yesterday and decided to go their separate ways.

Each house will develop its own package of budget cuts and taxes, with the result uncertain until the hectic conclusion of the 90-day session in early April.

But legislators agreed they could no longer defer action on Maryland's short-term problem: This year's revenues aren't enough to cover expenditures. The longer they wait to act, the less time they have to raise money through higher taxes or spending reductions before the fiscal year expires June 30.

Lawmakers said they hope the gas tax will raise enough money to limit cuts in state aid to Baltimore and the 23 counties to $70 million, or about half the amount Governor Schaefer suggested in a December deficit-reduction plan.

The lawmakers also are under increasing pressure to make a decision from county officials who have to draw up their own budgets. Legislators and local officials agreed the governor's proposed $142 million cut is too large for local governments to absorb.

While legislative leaders are behind the gas tax, they don't know if they can count on the vote of Baltimore legislators. City lawmakers have said they won't support tax increases this year unless the city gets a new and substantial financial aid package from the state.

"Can we do it without the city? Maybe," said Sen. Laurence Levitan, D-Montgomery, chairman of the Budget and Taxation Committee. "We may try."

Governor Schaefer has proposed that the General Assembly approve a nickel-per-gallon increase in the state's 18.5 cent gas tax.

But the legislative work group switched to the sales tax concept because it would bring in more money faster, said one delegate who asked not to be named. Because the pump price includes the existing gasoline tax, the plan essentially would put a tax on top of a tax.

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