Maryland budget deal would increase vehicle fees, tobacco tax

Maryland lawmakers reached a deal on the next state budget that will hit residents when they register their cars or buy nicotine products, but does not include a broad-based tax increase.

The framework of the deal will eventually raise about $320 million to $350 million per year through a variety of vehicle-related fees and $80 million annually from hiking taxes on tobacco and nicotine products.

Negotiators for the House of Delegates and the state Senate had been at an impasse for weeks over whether now is the right time to raise significantly more money for the state budget.

Over the past few days, there was a public negotiating session that included pointed speeches from delegates, and then senators canceled the next day’s hearings on House bills. But a marathon night of discussions among top negotiators that went until 1 a.m. Wednesday resulted in a budget agreement they unveiled later that afternoon.

Most of the vehicle-related money will be used to shore up the state’s Transportation Trust Fund, which pays for state and local road and transit projects. And the tobacco tax increase will be sent to the Blueprint for Maryland’s Future, an ambitious and expensive multiyear program to improve public schools.

“I think the legislative process was created for debate and ultimately collaboration and compromise, and that’s what we’ve done today,” Del. Ben Barnes, a Prince George’s County Democrat and chair of the House Appropriations Committee, told a group of reporters assembled on the ground floor of the State House Wednesday afternoon.

Standing beside Barnes was Sen. Guy Guzzone, a Howard County Democrat and chair of the Senate Budget and Taxation Committee. He said that, all along, both sides agreed in the importance of funding transportation and education as priorities.

The agreement takes off the table — at least for now — some of the money-raising ideas favored by the House of Delegates, including fully legalizing online gambling, known as “iGaming,” and requiring multistate corporations to calculate their taxes in a way that would have them pay more to Maryland.

The House of Delegates had, at one point, passed a version of the budget that included $1.3 billion in new money for the state from internet gambling, corporate tax reform and a variety of fee increases.

The Senate, meanwhile, stood firm on a much lower set of targeted fee increases.

Full details of the budget compromise — and, when approved, what Maryland residents can expect to pay — were not immediately available on Wednesday afternoon, but Barnes and Guzzone described the key components as:

• Increasing vehicle registration fees, with heavier vehicles paying even more because they put more wear and tear on the roads
• Creating a fee for electric vehicles, on the grounds that those drivers don’t pay the gas tax that funds transportation projects
• Creating a statewide fee for rides through ride-hailing services such as Uber and Lyft
• Increasing fines for speeding in highway work zones
• Increasing the tobacco tax by $1.25 per pack, with related increases for other nicotine products, like vapes and smokeless tobacco

The budget compromise does not include any changes to the sales tax, which was offered as a possible solution for raising money by expanding it to cover services. There’s also no requirement for the state to raise tolls, which also had been on the table at one point.

The budget agreement needs to be memorialized in paper and sent through the remaining steps of the legislative process. But Guzzone and Barnes expressed confidence that everything would be finalized before lawmakers adjourn their session at midnight on Monday.

Republican leaders in the House of Delegates issued a statement expressing relief that the deal got done and no extended session is necessary. And while they also were pleased that there are no broad-based tax increases, they noted that Marylanders will still pay more money.

“It is important to keep in mind that new revenues do not come from the government. Any tax or fee increase comes from the pocket of hardworking Marylanders,” said Del. Jason Buckel, a Western Maryland Republican who is the House minority leader.

As Guzzone and Barnes spoke to reporters, the governor’s chief lobbyist, Eric Luedtke, stood by. Gov. Wes Moore had repeatedly said he had a “very high bar” for raising taxes, and in recent days he urged lawmakers to get the budget done as he monitored the cleanup of the collapsed Francis Scott Key Bridge in Baltimore.

Speaking near the bridge site on Wednesday afternoon, Moore, a Democrat, said that he was pleased the budget impasse was resolved.

“This is going to give the people of our state the certainty that they need right now,” he said.

Pamela Wood

pamela.wood@thebaltimorebanner.com

Pamela Wood covers Maryland politics and government. She previously reported for The Baltimore Sun, The Capital and other Maryland newspapers. A graduate of the University of Maryland, College Park, she lives in northern Anne Arundel County.

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