What started as two possible paths to cutting Montgomery County’s energy tax rate has now tripled.
The County Council will consider six different options for reducing its energy tax when it finalizes the budget this May.
County Executive Isiah Leggett (D) has recommended keeping the energy tax rate as-is for fiscal 2014, but the council’s fiscal and transportation committees would like the body to consider further reducing the large increase the county implemented in 2010.
In May 2010, at the executive’s recommendation, the County Council raised the energy-tax rate by 155 percent on residential customers, or an estimated $13 per month on the average residential customer. For residential electric customers, the rates jumped from 0.5 cents to 1.3 cents per kilowatt-hour.
Energy taxes for nonresidential electric customers, such as businesses and government, jumped 60 percent from 1.3 cents to 2.2 cents per kwh.
With the new high rates, the council passed a sunset date, those 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 instead of sunsetting the tax increase as promised, the council continued all but 10 percent of the increase into the current fiscal year.
As the council prepares its spending plan for fiscal 2014, several members want to see the county continue to reduce the 2010 increase.
Options for cutting the tax in fiscal 2014 range from a 5 percent reduction in the 2010 rate increase proposed as a placeholder by Council President Nancy Navarro (D-Dist. 4) of Silver Spring, to a 10 percent reduction proposed by Councilman Philip M. Andrews (D-Dist. 3) of Gaithersburg.
Every percentage in between — 6 percent, 7 percent, 8 percent and 9 percent — will also be considered.
But at what percentage point the majority of the nine-member council will find common ground remains to be seen.
“We’ll see when the dust settles,” Councilwoman Nancy Floreen said.
“I’m in the 10 [percent] category,” Councilman Roger Berliner (D-Dist. 1) of Bethesda said.
A 10 percent reduction in the 2010 rate increase would cut available general fund dollars in 2014 by $11.6 million and drop the rate paid by residential electric customers to 1.1 cents per kilowatt-hour, by nonresidential customers to 2 cents per kwh.
Floreen (D-At Large) of Garrett Park said she would like to reduce the energy tax as much as the county can afford.
“I felt a strong commitment to reduce it as much as we could in previous years, economic circumstances made it very hard to do that,” she said. “I think we ought to be able to manage an $11 million reduction.”
Where the council could cut $11.6 million from its spending also remains to be seen.
Berliner, who chairs the council’s Transportation Infrastructure Energy and Environment Committee, said he personally has not seen enough of the proposed “puts and takes” to know where the reductions could be made.
Floreen, who is also on the transportation committee, said the council could look at the amount of money it is stashing into reserves and discretionary spending as a possible places to reduce.
Andrews originally proposed cutting pay increases for employees to absorb the $11.6 million reduction in energy tax revenue, but on April 30 his eight council colleagues voted against him, approving Leggett’s proposed package of pay increases in full for fiscal 2014.
Regardless of how much the council reduces the tax, members of the transportation and the Government Operations and Fiscal Policy Committee — who together constitute a majority of the council — recommended that the reduced revenue be evenly split between residential and nonresidential suppliers.