Montgomery County's energy tax has become a "$100 million problem," as the suburb's officials face the reality that the elevated tax might be here to stay, County Councilwoman Nancy Floreen said this week.
When the County Council increased the tax on residents' energy bills by 155 percent in June 2009, they set an expiration date of June 30, 2012. But last month, the council voted to extend the tax indefinitely, reducing the elevated rate by 10 percent. The new rate takes effect Sunday.
Though council members said last month that they hoped to be able to continue reducing the tax rate, the latest fiscal projections make that unlikely in the near future, said Council President Roger Berliner, D-Bethesda. The county is looking at a $71 million budget gap for fiscal 2014, and taking away the energy tax could make that a $171 million shortfall.
The council needs to find a new way to close the budget hole that doesn't include raising taxes, said Councilman Phil Andrews, D-Gaithersburg/Rockville. "Most people rightly feel that taxes are at a level that, if increased, would pose significant hardship for many people."
Some council members are calling for a re-examination of existing taxes.
In addition to extending the energy tax, the council increased property taxes 4.5 cents to 99.1 cents per $100 of assessed value in the fiscal year that begins Sunday. Meanwhile, the state legislature increased income taxes on residents earning $100,000 or more, which disproportionately affects county residents.
"We are creating incredible tax burdens on our residents," said Floreen, D-at large. "I've heard from neighbors recently who said, 'I'm moving my residence to Delaware or to Florida or wherever. I don't know how many people are doing that, but I'm hearing that way more than I used to."
And while taxes have increased, other costs have, too, said Councilwoman Valerie Ervin, D-Silver Spring.
"People are like, 'Our paychecks are getting smaller by the freaking day,' and things are costing more. Food costs more, gas costs more, rent costs more -- everything -- medicine costs more," she said. "People are frustrated and they're looking around to see who's to blame."