Fees, tolls and taxes: How Maryland plans to squeeze you to pay for transportation

I get my dogs’ food delivered by Amazon. It started during the pandemic.

Stores in Annapolis ran out of the brand they eat, and if you’ve ever suddenly changed your pets’ food, you know it can have messy consequences. All over the carpet.

But it also saved me the trouble of schlepping all those bags and cans across town. It cost less, too.

Except it doesn’t. There’s a hidden cost.

All those trucks trundling along with my dog food cost in other ways — wear and tear on Maryland highways, roads and streets. Now, Maryland lawmakers want everyone who benefits from the changing ways that roads are used to pay up.

With Maryland suddenly short of money for maintaining those pathways of commerce, state lawmakers in Annapolis are considering adding a 50-cent fee to most online purchase and home delivery transactions.

“It basically, to keep it simple, adds 50 cents a package for a road impact fee because we know from the data that the delivery vans and trucks are tearing up our roads,” Del. Marc Korman told members of his House Environment and Transportation Committee on Friday. “And the impact of those, believe it or not, is actually higher than if people just drove themselves to the market.”

Korman’s House Bill 1215 is among a range of ideas floating around Annapolis to fill a $3.3 billion shortfall in funding for the state’s six-year transportation plan. A commission that studied the problem recommended six ideas late last year, including higher registration fees and excise taxes.

But lawmakers are fleshing out those plans. Ideas include creating fees for using the roads, raising tolls to help pay for projects around the state, and giving counties the power to raise property taxes for local projects.

“I don’t relish this, believe it or not — I wish we didn’t have to do this,” Korman said. “But we need to find ways to build the infrastructure that Marylanders are demanding.”

The ideas seem reasonable, although some are worrisome because they open the door to increases without detailing the total.

What will pass remains to be seen. But it’s clear we’re going to be paying more in fees, tolls and taxes.

The 50-cent delivery fee would apply to every transaction instead of every item, so ordering all those cans of dog food, pens and pants so they come together would save you half a buck. Anything that gets a pass from the sales tax, like basic food and medicine, would be exempt.

The bill would also create a 50-cent fee for trips on rideshare programs such as Uber and Lyft. Call up a ride from your phone, and the state would take a bite. Same for food delivery using these services, like Uber Eats.

Local rideshare fees already exist in parts of Maryland. A state fee would be tacked on top of those, and nothing in the bill would prevent other jurisdictions from adding to your tab as well.

The e-commerce fee is new, an idea borrowed from Colorado and Minnesota.

In its first full year, the twin fees could raise $180.8 million, according to a fiscal analysis. The Maryland Department of Transportation would use that money to finance really expensive projects — think Red and Purple lines, expanding Interstate 270 or replacing the Bay Bridge — and help fund local ones. Over five years, they would increase the state’s borrowing limits by almost $1 billion.

How much higher tolls would raise is a less clear. HB 1070 gives the Maryland Transportation Authority the power to “optimize” tolls — an opaque way of saying they could rise to 95% of the maximum that a bridge or highway could support.

Ideas might include charging out-of-state travelers more, or creating peak travel prices while keeping commuter discounts. That could generate hundreds of millions of dollars a year, but Korman said amendments planned for his bill would keep it to $50 million to $100 million.

More importantly, the bill would change how toll revenues can be used. Currently, they are restricted to maintenance and construction of toll facilities. The state could spend the money raised beyond toll facility costs on other projects.

Korman didn’t mention Larry Hogan by name Friday, but he pointed the finger at the former governor’s decision to lower tolls in Maryland. Hogan’s popular cuts opened, by some estimates, a $250 million hole in the toll facilities budget.

“I have a dirty secret for you,” Korman testified. “The tolls need to go up, no matter what, in 2027. According to MDTA themselves, they will need to raise the tolls to service their debt and maintain the tollways.”

With that bill coming due, this thinking goes, why not get creative with how the money is spent? Perhaps the state would look at its overall budget, and adjust tolls according to its those needs. There’s wiggle room because Maryland’s tolls are lower than those in surrounding states.

It costs $2.50 to drive your car across the Bay Bridge if you have EZ Pass. The Delaware Memorial Bridge costs $4.75, and it’s a whopping $16 to $21 for the Chesapeake Bay Bridge-Tunnel near Norfolk, Virginia. If Maryland raised its toll to $5, it could double the $756 million collected in fiscal 2022.

“Now, I don’t like paying high tolls more than any of you, but if you actually look at our tolls, compared to our peers, our tolls are low,” Korman said. “And they’re not only the cuts from a few years ago, they are lower than they should be.”

If you’re wondering where all this money will go, good for you. Maryland’s gas tax is 47 cents per gallon, up 30% over the past two years. Even with vehicle taxes and registration and other user highway user fees, there still isn’t enough for all the roads, bridges and transit.

Local jurisdictions have been complaining for some time that the state is keeping an ever-growing share of this money. Many asked for changes like the one in House Bill 0919, sponsored by Del. Kris Fair.

It would give Baltimore and Maryland’s 23 counties the ability to establish property tax rates for specific transportation projects and education. If all 24 local governments added a penny to their property tax rates, it would generate more than $90 million a year, a fiscal analysis of the bill projected.

Anne Arundel County could raise $9.6 million with a county-wide one-cent property tax rate increase, or set up transportation tax districts around a specific commercial property and fund targeted projects around it. The bill limits the tax to 12.5 cents per $100 of assessable value.

“Other states do this all the time,” County Executive Steuart Pittman told the House Ways and Means Committee during a hearing on the bill last month. “So, I don’t know whether we’ll do it in Anne Arundel County, but I know that we’ll take a look at whether or not it makes sense.”

Montgomery County could get $23 million with a penny transportation tax. County Executive Marc Elrich told the committee he wants that authority to compete with Fairfax County, Virginia — which uses local transportation tax districts to help fund rail and road projects.

“I sit across the river from Fairfax, and everybody from my jurisdiction all the way up to Baltimore asked about what Fairfax is doing and how Fairfax is growing,” he said. “Fairfax is growing because they are investing. … Montgomery County is unable to do anything to match the investments that have been made in Northern Virginia.”

A billion here, an optimized toll there, it doesn’t sound so bad. There are companion pieces in the Maryland Senate, so these ideas have momentum.

What’s missing from all the analysis of these bills is the combined effect on the users. Not how much do we need but how much can we afford to pay?

I get it, we need more money if we want better transportation. I’m just not sure anyone is tallying up what’s fair for the individual taxpayer.

There’s an old saw that legislation is like sausage making, better not to ask. I disagree.

I like to know just how much my dog food is going to cost.

Rick Hutzell

rick.hutzell@thebaltimorebanner.com

Rick Hutzell is the Annapolis columnist for The Baltimore Banner. He writes about what's happening today, how we got here and where we're going next. The former editor of Capital Gazette, he led the newspaper to a Pulitzer Prize for coverage of the 2018 mass shooting in its newsroom.

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