Council votes for 150 percent increase in energy taxes

By: Brian Hughes
Washington Examiner
May. 19, 2010

Montgomery County residents will pay on average $150 more in energy taxes next year, the County Council decided Wednesday.

Homeowners will pay $251 a year in energy taxes on average, 150 percent more than what they pay now -- and roughly $50 more than County Executive Ike Leggett proposed.

Council members voted to raise the amount of revenue brought in through energy taxes by 85 percent, slightly scaling back Leggett's proposal to double the funding. But by reducing the burden on businesses and nonresidential customers, homeowners will see their rates soar higher than the county executive proposed.

Businesses have been fighting the proposed tax increases, saying they would foot an unfair amount of the bill. Subsequently, council members decided to evenly split all new taxes between the two sectors.

In comparison, nonresidential energy taxes will swell to an average of $4,042 annually, for a 54 percent bump.

"I think it's too large of an increase on homeowners," said Councilman Phil Andrews, D-Gaithersburg/Rockville, the lone vote against the increase, adding that the county relies too heavily on residents for revenue through property taxes.

However, the majority of the council welcomed the new plan. They say it lessens the overall tax load and will raise an extra $110 million to fill a nearly $1 billion budget gap.

Until July 1, however, energy taxes will be even higher.

Council members voted to increase rates more than 300 percent for residents and double them for nonresidential customers. The revenue will generate $21.4 million to help close this year's budget hole.

Despite the rosier outlook, businesses remained unhappy with the plan.

"We believe that this tax increase will have the unintended consequence of making Montgomery County less competitive in the race to attract both federal and commercial employers," said Steve Simon, spokesman for the county's Chamber of Commerce.

The council also reached a deal with Montgomery County Public Schools to reduce its operating budget by $19.7 million for the year. Whether to furlough teachers will be up to school system officials.

The county also will implement between $300 and $800 in fees for ambulance rides after the council passed Leggett's proposal 5-4.

County residents won't be required to pay the fees, as the county targets nonresidents who use the ambulances. Most of the Washington region already charges for ambulance rides.

Volunteer firefighters tried to squash the measure, saying it would deter people from calling 911. They will pursue a voter referendum in the fall, which would keep the county from collecting the revenue until decided. Council members are expected to take a straw vote on the budget Friday.

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