Transportation: proposed retail delivery fee, vehicle tax changes and new TTF revenues to boost MTA but leave some road needs unfunded

Steve McCullough, transportation lead at the Department of Legislative Services, presented the transportation section of the governor's fiscal plan and the consolidated transportation program to the House Environment and Transportation Committee on Jan. 30.

McCullough said the largest single new transportation revenue in the proposal is a 75¢ retail delivery fee on taxable deliveries that the administration projects will generate about $225 million per year. Other proposed changes include modifying the vehicle trade‑in allowance (expected to raise about $140 million annually in the DLS presentation), accelerating a scheduled motor vehicle registration fee phase‑in (bringing $50 million into 2026), and increasing VEEP fees. The administration also proposes allowing the Motor Vehicle Administration to increase certain fees through the regulatory process to capture at least 115 percent of eligible costs.

McCullough reported that the new and previously enacted transportation revenues together total about $3.99 billion over a six‑year forecast period, and that roughly half of the new revenue is expected to cover increased operating spending with the remainder supporting capital programs. He said general fund transfers account for part of the special‑fund increases (DLS lists about $593 million of general fund transfers to the transportation trust fund in the current forecast) and that the forecast includes a proposal to use GARVEE revenue bonds for up to $248 million through 2030 for eligible projects.

On impacts to project modes, McCullough said the Maryland Transit Administration (MTA) shows the largest increase in capital funding in the current consolidated transportation program—nearly $1.0 billion compared with the previous forecast—driven in part by federal vehicle replacement grants and the need to upgrade stations, signaling and related infrastructure to make vehicle replacements effective. He said state highway capital funding shows a decrease of about $575 million compared with last year's forecast, although state highway remains the largest mode by funding.

Committee members asked about implementation details for the electric‑vehicle (EV) add‑on registration fee enacted last year. McCullough said the MVA delayed the effective date on purpose to allow programming changes; he said the department expects to collect the fee in 2026. In response to a question about household delivery orders that mix taxable and nontaxable goods, McCullough explained the delivery fee would apply to an order if it contains any item subject to state sales tax.

McCullough also noted the consolidated transportation program shows higher operating spending in the forecast (about $2.0 billion in increased operating spending over six years), leaving about $1.2 billion available for capital program increases in the six‑year window. He concluded his presentation and answered committee questions about the forecast, the state of good repair inventories and the use of federal grants.