The state's annual gas tax update may still not be enough to keep up with changes in the transportation sector and rising project costs.
In an article for the Maryland Association of Counties, Kevin Kinnally explains the state of Maryland's gas tax structure, and why the fee changes on an annual basis.
As Kinnally explains, unlike the federal gas tax — which has remained the same since 1993 — Maryland's gas tax is adjusted every year based on a formula established in 2013. The formula ties the tax to inflation, limiting that portion of the increase to 8% per year. "Lawmakers also phased in an equivalent sales and use tax rate on motor fuel. Because wholesale fuel prices fluctuate throughout the year, this portion can rise or fall."
According to Kinnally, the reliance on a gasoline tax is increasingly mismatched with the realities of the transportation sector, which is shifting toward electric vehicles and other gas alternatives. "The annual gas tax adjustment helps transportation revenues keep pace with inflation, but it does not change those underlying trends."
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