Gov. Hogan, Comptroller Franchot Call For Each Other To Act To Hold Off Md. Gas Tax Hike
Motorists in Maryland are facing a gas tax increase that would take effect July 1st, but Governor Larry Hogan said Monday that State Comptroller Peter Franchot could take action to halt the increase or minimize its impact.
The Republican Governor is calling upon the Democratic Comptroller to use ‘every legal and regulatory power’ at his disposal to blunt the impact of rising gas taxes and that he consider granting an extension for paying the taxes and removing penalties for unpaid tax.
The comptroller announces gas tax increases on or before June 1st each year under legislation that was passed by the General Assembly in 2013.
Franchot, a candidate for Governor this year, said as his office explores regulatory and legal authority over the issue, he called upon Hogan to proclaim a State of Emergency and suspend the state motor fuel tax until September.
Otherwise, the gas tax would increase to 43 cents, from 36 cents.
Hogan wrote the following letter to Franchot Monday:
Dear Comptroller Franchot,
It is my understanding that you will soon announce large increases to Maryland’s motor fuel tax. This tax increase, while hardship-inducing for Marylanders at any time, is simply unconscionable at this moment when gas prices are already at their highest level in recorded history amid a period of prolonged inflation and economic uncertainty.Â
I know that you agree we should do more to give Marylanders a break from these punishing prices. That is why it is my hope that you will use every legal and regulatory power at your disposal to halt or minimize the impact of the accelerating gas taxes, and that you consider granting an extension for paying the taxes and removing penalties for unpaid tax, including the revocation of business licenses. This would be in line with similar actions you have recently taken when you perceive various state laws to be too burdensome on Marylanders; for example, in January of this year, you extended the individual income tax filing and payment due date for the third consecutive year, as well as the individual estimated tax payment due dates, to give “breathing room” to Marylanders who were struggling financially.
In 2015, I proposed legislation to permanently suspend increases to the gas tax, which was unfortunately and shortsightedly rejected by the General Assembly. It was even more unfortunate when the General Assembly failed to pass legislation to prevent further increases to the gas tax during the 2022 session—well into the current inflation crisis—despite proposed bills to repeal a portion of the tax (SB0337 and HB0144) and to suspend the increases through 2024 (HB1191 and SB0737).Â
These failures make it incumbent on your office to step up and take action to help struggling Marylanders. After consulting with state budget and transportation officials, I am confident that the state can absorb the financial impact of foregoing this ill-conceived and ill-timed tax increase. Given shaky oil markets, record inflation, and a skyrocketing cost of living, the continued surges in gas prices are inflicting more pain at the pump than Marylanders can bear. I am calling on you to take immediate action to provide much-needed relief, particularly as citizens of our state begin to plan their summer travels.
Sincerely,
Larry Hogan
Governor
Franchot’s response:
Dear Governor Hogan:
Thank you for your letter concerning the unfortunate statutory provision that triggers an automatic increase to the State’s motor fuel tax. I wholeheartedly agree that at a time when the rising costs of goods and services are imposing even more financial burden on Maryland families and small businesses, increasing the gas tax on our residents is both morally and economically irresponsible.
Indeed, it is disappointing that the executive and legislative branches were unable to come together and prevent this automatic increase during the 2022 Legislative Session. Instead, we now find ourselves in a situation where we are looking for legal and regulatory loopholes to prevent this devastating tax hike from taking place.
Over the past several days, my staff and attorneys have been exploring regulatory and legal authority
provided by law to my agency to prevent this automatic, mandated increase from taking effect. As my office continues to look for regulatory and statutory flexibility on this matter, I am urging you to immediately proclaim a State of Energy Emergency as set forth by state law (Public Safety Article – § 14-304) and suspend the State’s motor fuel tax until September. Doing so would not only provide relief for Marylanders from the current motor fuel tax rate, but it will also temporarily prevent an increase to the gas tax from taking effect.
As you noted in your letter, our State is in a strong fiscal position to absorb any financial impact of
forgoing these increases. It is due to our residents and our small businesses that our State reported an
unprecedented $7.5 billion surplus, and during this time of global economic instability, it is critical that we
utilize surplus funds to immediately deliver relief to the people who pay our salaries. Any lost revenue to the Transportation Trust Fund can be replenished from our historic surplus, just as we did for the one-month gas tax holiday. While I was disappointed that our gas tax holiday came to an unnecessary halt, I hope you will respond with executive action during this economic emergency and temporarily suspend the gas tax – which will increase to 43 cents – for four months. My office stands ready to implement a gas tax holiday once again as we seamlessly and effectively did last month.
Absent any executive or legislative remedy – and without any legal or regulatory flexibility afforded
to me by law, which my office is continuing to explore – Marylanders will unnecessarily be financially
burdened at a time when so many are already struggling. Moments like this require an all-hands-on-deck
approach, and I am committed to utilizing every legal and regulatory tool at my disposal to respond to this crisis. Let us work together to deliver meaningful solutions to these challenges and show the people of Maryland that its government can – and will – respond to these trying times with bold, decisive, and swift action.
Sincerely,
PETER FRANCHOT
Comptroller of Maryland
