Montgomery County lawmakers consider phasing out, reducing energy tax

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Local,Maryland,Rachel Baye

A Montgomery County energy tax increase set to expire in June will likely be revived in the coming fiscal year, though lawmakers are exploring options for reducing the burden slightly.

The average Montgomery County resident pays $246 in annual energy taxes, and come June 30, that amount is scheduled to drop to $92 if lawmakers don't touch it.

County Executive Ike Leggett proposed the energy tax in 2003. In fiscal 2004, the rate tripled, and in fiscal 2011, the county approved a 155 percent rate increase on residents, 60 percent on businesses, with the promise of a sunset after two years. Now Leggett has proposed extending the elevated tax rate indefinitely.

The tax is expected to bring in roughly $245 million if extended at its current rate versus $131 million if the rate returns to what it was in fiscal 2010, an Office of Legislative Oversight analysis shows. If the Council votes to reduce the tax, it will have to find $114 million in additional revenue or cutbacks, Leggett said.

On Monday, two Council committees will consider other options. The Council could reduce the revenue the tax earns by as much as $26 million -- the amount the county could make up by raising the property tax to the legal limit -- which would make the average resident's annual bill $211 and the average business's bill $4,026.

Or the council could reduce the tax over two years, so that it reaches the level it was at two years ago, by the end of fiscal 2014. This would cost the average resident $169 and the average business $3,584 in fiscal 2013, the analysis shows.

County Council members have not yet come to an agreement on the issue, but many seem to oppose letting the tax increase sunset.

"The feedback I am getting is that [$114 million] is too large a number to absorb in any one year back into our budget, and so what I am exploring is, 'Are there ways to attack this incrementally?' " said Council President Roger Berliner, D-Bethesda. "It's sort of like Pacman -- we just sort of nibble at it."

For Councilman Hans Riemer, D-at-large, decreasing the energy tax only makes sense if the county's property tax is raised to make up the difference.

Meanwhile, Councilwoman Nancy Floreen, D-at-large, and Councilwoman Nancy Navarro, D-Eastern County, both hope to reduce the tax increase eventually -- just not this year.

But the tax hits businesses hard, said Montgomery County Chamber of Commerce Director of Public Affairs Jonathan Sachs. If the Council can't find a way to cut it now, they should plan to phase it out over the next few years, he said.

And for County Taxpayers League President Joan Fidler, anything other than cutting the tax is a broken promise.

"Every year some new excuse comes up," she said. "It needs to be sunset."

rbaye@washingtonexaminer.com

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