Lawmakers say Montgomery County needs extension of higher energy tax

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Local,Maryland,Rachel Baye

Montgomery County lawmakers on Monday considered reducing the energy tax slightly or extending it for several more years, as they said the county cannot afford to lose the extra revenue the tax has brought in since 2010.

Under the current rate due to expire June 30, the average resident pays $246 a year in energy taxes, while the average nonresident pays $4,395. It brings in $245.2 million a year.

In 2010, the Montgomery County Council approved the temporary 155 percent rate increase on residents and a 60 percent rate increase on businesses; residents before the tax hike were paying $92 a year in energy taxes while businesses paid $2,772. Now County Executive Ike Leggett wants to extend the 2010 rates indefinitely, arguing the additional $114 million the elevated tax brings in would be hard to replace.

Energy options
Option 1: Don't let the tax rate expire on June 30
 Annual revenuePercent of revenue by sourceAverage annual tax bill
Residential$90.8 million37 percent$246
Nonresidential$154.4 million63 percent$4,395
Total$245.2 million
Option 2: Return to pre-2010 rates
 RevenueChange from current ratePercent of revenue by sourceAverage annual tax bill
Residential$33.8 million-62.8 percent26 percent$92
Nonresidential$97.4-36.9 percent74 percent$2,772
Total$131.2 million-46.5 percent
Source: Montgomery County Council

"In 2010, we said, 'We've got to do this now.' We really had no options, and everyone understood that," said Councilwoman Nancy Floreen, D-at large, representing the majority opinion of the two committees. "The question was, 'When will the economy come back?' As far as I'm concerned, it's not there yet."

One option for reducing the energy tax would be to replace the lost revenue with an increase in the property tax beyond the hike Leggett has proposed for fiscal 2013, said Councilman Hans Riemer, D-at large.

"The energy tax is one that can be raised midyear," he said. "To the extent that you back off of the current high level, you leave the ability in the future if there is another economic crisis to have an emergency revenue generator, which helps the county's fiscal position."

But several other council members disagreed with that approach.

Phasing the tax level down -- an approach the Montgomery County Chamber of Commerce supported at a recent public hearing -- also would be a mistake, said Councilwoman Valerie Ervin, D-Silver Spring. "It's either going to be in or not in. Either we're going to end it or we're not."

Likewise, Leggett said reducing the revenue the tax earns even slightly would be a mistake, especially given the uncertainty surrounding the Maryland budget.

In the end, voters may make the final decision on the tax in November. Activist Robin Ficker said he has collected more than 12,000 signatures on a petition challenging the energy tax. State law requires 10,000 valid signatures to get the measure on the ballot.

"They're using the people of Montgomery County as an ATM," Ficker said.

rbaye@washingtonexaminer.com

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Rachel Baye

Staff Writer - Education
The Washington Examiner