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State Leaders Moving to Temporarily Suspend Gas Tax as Revenue Estimates Soar

A person fills a car with gasoline from a green pump
Photo by Sean Rayford/Getty Images.

With new revenue estimates showing the state’s stockpile of cash growing to record levels while fuel prices keep soaring, Maryland’s top political leaders announced Thursday afternoon that they will work together to suspend the state’s gas tax for 30 days.

Efforts to shield motorists from the state’s 37-cent-per-gallon tax on gasoline intensified after the Board of Revenue Estimates projected Thursday that Maryland’s budget surplus is expected to grow by another $1.6 billion, totaling about $7.5 billion over the next two years.

In a statement, Gov. Lawrence J. Hogan Jr. (R) called the surplus “a once-in-a-generation opportunity to advance substantial tax relief for our families, small businesses, and retirees.”

Aides to Hogan and legislative leaders began immediate discussions about a measure that would suspend collection of the state gas tax for 30 days. Service stations would continue to collect the levy but would be expected to reduce prices accordingly.

“[W]e are working with our legislative partners on an emergency suspension of the gas tax to help with the pain at the pump,” Hogan said. “We also support ongoing efforts in the legislature to suspend automatic increases in the gas tax,” Senate President Bill Ferguson (D-Baltimore City) and House Speaker Adrienne A. Jones (D-Baltimore County) issued a joint statement a short time later, embracing the plan.

“Marylanders need help now, and we are standing together to provide that assistance by suspending the Maryland gas tax for 30 days,” the lawmakers wrote. “During the last month, Marylanders have seen gas prices increase exponentially, compounding existing rising costs.

Increased revenue projections for this year and next year give us the flexibility to provide immediate relief to families.”

A bill to suspend the gas tax could be introduced as early as Friday, an official said, with approval coming potentially by the middle of next week.

Key to the success of the tax holiday would be making sure consumers see a timely drop in fuel costs, officials acknowledged.

The announcements came shortly after the Board of Revenue Estimates voted to increase the revenue projections for the current and upcoming fiscal years by a combined $1.6 billion.

At the board’s meeting, Comptroller Peter V.R. Franchot (D) called on the governor and General Assembly to enact a three-month state gas tax holiday and renewed his call for a $2,000 stimulus check for lower-income Marylanders. Franchot, a candidate for governor, has also called for a $500 million relief account for Maryland small businesses.

“There is still a large group of Marylanders who are not feeling or getting their fair share of the economic prosperity that the vast majority of Marylanders are experiencing,” Franchot said. “The economic fault lines that existed before COVID-19 forced our economy to shut down remain large, and for so many of our friends and neighbors who are in low-wage jobs, they continue to suffer from the devastation of this pandemic without much hope of turning things around.”

After the announcements by Hogan, Ferguson and Jones, the comptroller commended them for acting in “lightning speed,” but continued to call for more.

“The unfortunate reality is the economic whiplash at the gas pump resulting from the Russian invasion of Ukraine will be felt by Marylanders for more than 30 days,” Franchot said in a statement.

The Board of Revenue Estimates, which also includes Treasurer Dereck E. Davis (D) and Budget Secretary David R. Brinkley, increased the state’s tax revenue projection for the current fiscal year to $22.5 billion, an $867 million increase from the December estimates. The official revenue forecast for Fiscal Year 2023, which begins July 1, was adjusted upwards by an additional $737 million to $23.6 billion.

The new estimates are likely to impact the General Assembly’s budget deliberations; the Senate Budget and Taxation Committee could vote on a budget plan Friday afternoon.

Republicans in the legislature have been pushing the Democrats who control both chambers to enact substantial tax cuts, and those calls grew louder after Thursday’s Board of Revenue Estimates meeting. They painted a series of tax relief measures that the House of Delegates passed last week, on items like diapers and oral health products, woefully inadequate.

“Maryland Democrats have tossed a few pennies to taxpayers and expect them to be grateful,” said House Minority Whip Haven N. Shoemaker Jr. (R-Carroll). “This Marie Antionette ‘let them eat cake’ approach is an insult to struggling families everywhere. With a $7.5 BILLION surplus, there is no way anyone in the General Assembly can honestly say we cannot afford broad-based tax relief for Marylanders.”

Del. Kathy Szeliga (R-Baltimore County) on Wednesday evening called on Hogan to provide $1,000 in tax relief check for every Maryland taxpayer — arguing that it would only use up half of the state’s projected surplus.

Josh Kurtz contributed to this report.