Montgomery County’s controversial energy tax could shrink a bit more in fiscal 2014.
Council President Nancy Navarro and Councilman Philip M. Andrews both introduced separate resolutions Tuesday to reduce the tax, bringing it closer to the rates taxpayers were promised last July.
Navarro’s proposal would drop the rates 5 percent from a 2010 rate increase, resulting in a $5.8 million reduction in revenue.
County Executive Isiah Leggett (D) has proposed a $4.8 billion budget for fiscal 2014, which begins July 1. The energy tax would provide $222.3 million under Leggett’s budget proposal.
While the council president said she is considering a cut to the tax, her proposal is mostly just a placeholder. Introducing a resolution was necessary to open the door for council discussion, said Navarro (D-Dist. 4) of Silver Spring.
“I’m interested in exploring the 5 to 10 [percent] range,” she said. “Since we don’t know yet how things are going to proceed, we just want to make sure that we have that [resolution] in place.”
Last May the council reduced the energy-tax rate by 10 percent, despite a 2010 promise to reduce it much more.
The council is hoping to reduce the tax again this year, but by what percentage remains to be seen, Navarro said.
While only one resolution was necessary, Andrews (D-Dist. 3) of Gaithersburg put forth a second, more specific, proposal to cut the tax rate.
Andrews’ proposal would cut the rates 10 percent from the 2010 increase, which would reduce revenue by about $11.5 million. Andrews said he appreciates the interest among his colleagues to continue the progress it began last year reducing energy-tax rates.
Andrews said the reduction in the tax made last year was “a good start,” adding, “I’m proposing that we do that again.”
Andrews — who has announced he will run for county executive in 2014 — would provide smaller raises to county employees to offset the lost revenue.
Leggett has proposed to provide county employees with their first raise in three years this July.
Through a combination of cost-of-living adjustments and step increases, Leggett has proposed union contracts that would give police eligible for both a raise of about 7.35 percent next year, firefighters eligible for both a raise of 9.75 percent and general employees eligible for both a raise of 6.75. Only employees eligible for a step increase would receive one. Eligible police and fire and rescue employees also would receive retroactive step increases.
Reducing those proposed raises by 35 percent still would give employees a bump in pay, Andrews said, but at a level he called “reasonable and sustainable” and that would allow for a 10 percent reduction in energy-tax rates.
In his fiscal 2014 budget proposal, Leggett has recommended the council keep energy-tax rates static.
In May 2010, at the executive’s recommendation, the County Council raised the energy-tax rates 85 percent, or an estimated $13 per month for the average residential customer.
For residential electric customers, the rates jumped from 0.5 to 1.3 cents per kilowatt-hour.
Energy taxes for nonresidential electric customers, such as businesses and government, went from 1.3 cents to 2.2 cents per kwh.
Few people can escape energy taxes. Property taxes — which will bring in about $1.5 billion to county coffers under Leggett’s budget — are not paid by nonprofits or government agencies.
Also at the executive’s recommendation, the council set a sunset date when the new, higher rates would expire and the old rates would apply.
Under the sunset, energy taxes were to revert to the lower rates July 1, 2012, the start of fiscal 2013.
But last May, the council instead chose to reduce the rate gradually, dropping it only 10 percent, to 1.2 cents per kwh for residential electric customers and 2.1 cents per kwh for nonresidential electric customers.
Along with the two resolutions to reduce the energy tax, the council introduced Tuesday three resolutions that will eventually indicate their intent to approve or modify Leggett’s pending agreements with the county’s three employee unions, Fraternal Order of Police Lodge 35, International Association of Firefighters Local 1664 and United Food and Commercial Workers/Municipal and County Government Employees Organization Local 1994.
The council’s Government Operations and Fiscal Policy committee will consider the three agreements Leggett reached with the unions during its April 22 work session and is expected to issue its recommendation on April 25.
By law, the council must indicate its intention on funding the agreements by May 1, according to council documents.