Watered-down state 'gas guzzler' law could be a money loser Penalty for poor-mileage cars won't raise any revenues for two years.

April 22, 1992|By Peter Jensen | Peter Jensen,Staff Writer

Maryland's new "gas guzzler" law was supposed to raise millions of dollars in state tax revenue next year and encourage buyers to switch to fuel-efficient cars.

But with the dust settled from an exhaustive legislative session that ended April 10, experts now believe it may do little of either.

"Certainly for the next two fiscal years, it doesn't accomplish much of anything," said Stephen G. Zentz, deputy secretary of the state Transportation Department.

The first of its kind in the nation, the guzzler law adds a surcharge to the cost of fuel-inefficient cars and gives a rebate from the state's 5 percent titling tax to buyers of cars with high-mileage ratings.

It was initially expected to raise up to $30 million a year for the state. But in the last-minute wheeling and dealing, the gas guzzler penalties were weakened so much that officials now think the law will be a revenue-loser in its first two years, costing the treasury about $1.3 million.

In later years, it could raise $15 million annually, far less than backers had hoped.

Even environmental advocates say the gas guzzler tax and the gas "sipper" rebates are so small they're unlikely to affect car-buying habits in any significant way.

"We had a good concept that simmered too long -- that happens," said Nita Settina, a lobbyist for the Chesapeake Bay Foundation, which supported the measure. "It was unnecessarily and almost fatally watered down."

Beginning with 1993 models, car buyers will face a flat $100 guzzler surcharge when they buy a new car that has an Environmental Protection Agency mileage rating of less than 21 miles per gallon. They will get a flat $50 rebate if their new car gets more than 35 mpg.

In two years, the standards become slightly tougher: a $50 penalty for every mile per gallon under 27 on 1995 or later models and a $50 rebate for every mile per gallon over 35.

But there's a big catch: a 1 percent cap on both the tax and the rebate. That means a high-mileage wonder like the Geo Metro, which gets 47 mpg, will qualify for only a $100 rebate because it costs less than $10,000.

Conversely, the Chevrolet Caprice, a full-size sedan that averages only 20 mpg with its 5-liter, V-8 engine, would face no more than a $200 tax because it sells for less than $20,000.

Car dealers say the net result will be consumer confusion and more paperwork for them.

"It's a useless bill," said Robert D. Suddith, owner of several Hagerstown car dealerships. "You have to be a Philadelphia lawyer to figure it out. It's just another thing that'll have to be explained to the consumer."

Alan D. Abramson, owner of Archway Ford in Baltimore, is skeptical that the small incentives will sway consumers anyway. "It just seems to be an annoying thing, and it sends the wrong message when the car industry is having its own difficulties."

Pickup trucks are exempted, and passenger vans -- including the popular General Motors minivans manufactured on Broening Highway in Baltimore -- will probably be excluded as well when the Department of Transportation finishes its regulations. The law is not expected to apply to used cars built before the 1995 model year.

The legislation looks downright wimpy when compared with the federal government's 12-year-old gas guzzler law, which penalizes manufacturers and importers up to $7,700 for each car they market that gets less than 22.5 mpg.

Opponents of the Maryland law were incensed by how the measure was passed. Soundly defeated by the House Ways and Means Committee, it was resurrected by the House leadership and tied to a proposed gas tax increase in the waning days of the session.

Once it was included in that tax plan, there was little opportunity to debate the plan's merits. Instead, Senate leaders chose to weaken it -- adding such things as the phase-in and the 1 percent cap.

"The legislation never should have been passed," said Sen. Laurence Levitan, chairman of the powerful Senate Budget and Taxation Committee. "The Senate did not like it, to say the least, but we made it harmless enough."

Even supporters concede there is a minimal effect for the first two years. But by fiscal 1995, gas guzzler taxes are expected to raise $7 million for the state and $14 million to $15 million in the following years.

That is still far short of what they had originally hoped. Legislators wanted to use guzzler revenues to help pay for Prince George's and Montgomery counties' share of operating costs for Washington's Metro rail and bus system -- about $21.4 million next year. The state already subsidizes Baltimore's Mass Transit Administration operating costs.

The Transportation Department will have to make up the difference from other sources, including a one-time, $48 million windfall when the Motor Vehicle Administration converts from annual to biennial registrations this year. In the long term, the money will come from gasoline taxes, including a 5-cent-per-gallon increase that goes into effect May 1.

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