Montgomery County Executive Ike Leggett is banking on an energy tax hike to help compensate for a $168 million decrease in income tax revenues, part of a much larger $1 billion budget gap. Leggett wants to double the energy taxes, a plan that would cost some of the area’s larger businesses — think coveted biotechnology firms — hundreds of thousands of dollars more a year. (The move is not unprecedented in trying budget times. Baltimore City Mayor Stephanie Rawlings-Blake also wants to increase energy taxes, but her proposal would cost residential customers an additional 60 cents a month).
Under Leggett’s plan, the county would bring in about $192 million in fiscal 2011 from the energy tax to businesses, a lot more than the $88.6 million Washington said Pepco collects in distribution rates from Montgomery County businesses each year. The rate is far from set. Now Council President Nancy Floreen is saying that the council could tinker with the formula, spreading more cost from businesses to residents.
The way it sits now, Montgomery’s energy tax falls mostly on the shoulders of businesses, which pay about 2.65 percent more than residential customers. Business customers pay 1.3843 cents per kilowatt of electricity and 11.9214 cents per therm of heating fuel a year, compared to residential customers, who pay a little more than half a cent per kilowatt of electricity and a little less than half a cent per therm of heating fuel.
Leggett had initially planned on seeking a 40 percent energy tax increase, and then bumped it up to 63.7 percent before deciding to ask the County Council to approve doubling the tax. Residents, businesses and the county’s largest power distributor, Pepco, testified against the requested 63.7 percent increase in a hearing last week. Under that plan, the average residential customer would see an increase in energy tax payments to $161, up from $99 a year; businesses would on average pay $4,157 a year, compared to the $2,618 they pay now. If Leggett gets to double rates, residents would pay $198 a year and businesses would pay $5,236.
According to Maryland Politics Watch, Pepco representative Charles Washington testified applying the 63.7 percent rate hike to the bills of some customers: As demonstrated below using actual randomly selected commercial accounts, this increase will have a real impact on County businesses. One restaurant in Silver Spring will see an increase of over $3,000 a year. A hotel in Bethesda will see a tax increase of approximately $41,000 a year. The County’s successful Biotech companies will see increases of hundreds of thousands of dollars of year, with at least one projected to see an increase of over half a million dollars. SOURCE: Maryland Daily Record