Gasoline prices are heading in different directions in Maryland and Virginia, as a result of new motor fuel tax laws that go into effect in two weeks in the bordering states. Starting July 1, the cost of gasoline in Maryland will likely increase by over three and a half cents a gallon. In a historic fuel tax policy transformation, Virginia’s pump prices will likely drop by nearly six cents per gallon that same day.
It is a tale of two states. On the first of July, Virginia becomes the first state to officially sever its long-time reliance on the flat state fuel excise tax, which exacts 17.5¢ per gallon on gasoline and diesel fuel. It replaces it with a tax on the wholesale price. In contrast, that’s also the date the state motor fuel tax rate will increase by nearly four cents in Maryland, edging up from 23.5¢ a gallon to 27.3¢ per gallon. Motorists in both states will continue to pay the federal gas tax of 18.4¢ per gallon.
"We are witnessing a sea-change in gas tax policies and in transportation funding priorities in Maryland and Virginia," said Ragina C. Averella, AAA Mid-Atlantic’s Manager of Public and Government Affairs. "Consumers will see the results of this paradigm shift at the self-serve gas kiosk."
Because of the shift in motor fuel tax policies in the statehouse, Maryland could emerge as one of the most expensive states in the country to purchase gasoline in the long run, consumers fear. Yet, motorists in Virginia will benefit from having one of the cheapest gasoline price-points in the nation.
In a rare alignment of the planets, the legislatures in the neighboring states took major steps earlier this year to resolve their besetting long-term transportation funding crisis. Like most states, Maryland and Virginia faced what some analysts called a major math problem - "declining funds for infrastructure investment, stagnant motor fuels tax revenues, and increased demand for transit and passenger rail." Though their methods and their paths for arriving at a solution differed, both states will be flushed with cash to underwrite and fund transportation and transit projects for years to come, Averella observed.