This story was corrected on May 16, 2014. An explanation follows.
The energy tax for Montgomery County residents is likely to drop as part of the fiscal 2015 budget, but not as much as several council members want.
The tax cut will result in an $11 yearly reduction for the average residential electricity customer, and $111 in the yearly bills of average commercial customers, according to the county.
Three years ago, the County Council agreed to nearly double the energy tax to increase revenue during the recession. In fiscal years 2013 and 2014, the council cut the increase by 10 percent each year. Some council members wanted to have another 10 percent cut in fiscal 2015, but the council voted 5-4 against that proposal and settled on a 7 percent decrease instead.
Council Vice President George L. Leventhal (D-At Large) of Takoma Park, and Council members Nancy Floreen (D-At Large) of Garrett Park, Philip M. Andrews (D-Dist. 3) of Gaithersburg and Roger Berliner (D-Dist. 1) of Bethesda pushed for the 10 percent decrease, which would have lead to a drop in revenue of about $11.5 million.
They were outnumbered by Council President Craig L. Rice (D-Dist. 2) of Germantown and Council members Nancy Navarro (D-Dist. 4) of Silver Spring, Cherri Branson (D-Dist. 5) of Silver Spring, Hans Riemer (D-At Large) of Takoma Park and Marc Elrich (D-At Large) of Takoma Park.
The council gave preliminary approval to a $4.99 billion budget on Thursday and is scheduled to give final approval May 22.
The energy tax applies to energy suppliers, who generally pass the costs on to consumers, according to a county memorandum.
County Executive Isiah Leggett proposed the 100 percent increase in the tax as part of his fiscal 2011 budget, although the council eventually approved an 85 percent increase that raised an extra $110 million.
The total energy tax was estimated to raise about $217 million in fiscal 2015, making it the county’s third-largest revenue source behind income taxes and property taxes.
The council and executive had pledged to eliminate the increase after two years, but found they couldn’t do so because of the recession, Berliner said Thursday.
Funding good, progressive programs requires a thriving business community and homeowners who don’t feel overtaxed, he said.
It’s clear that the county isn’t attracting enough new businesses, he said.
The council has reduced the tax by 10 percent a year for the past two years, and should do so again this year, he said.
The 7 percent cut in the council’s proposed budget represents “not a 7 percent solution, but a 3 percent retreat,” Berliner said.
A 7 percent reduction would mean between $7 million and $8 million less revenue.
He suggested they make up the 3 percent by taking about $3.5 million from a surplus generated by fees from the county’s Department of Permitting Services.
Businesses create jobs that provide revenue to fund the budget, which contains a lot of worthwhile items, Floreen said.
But the council is sensitive to the financial burden the county places on residents to fund all those programs.
“Taxes do not remain low, by any means, in Montgomery County,” Floreen said.
Navarro said there’s no doubt the council has been committed to reducing the energy tax, but she supported the 7 percent reduction because the county still had not been able to fund all the programs it should.
As a member of the council’s Health and Human Services Committee, there were “many, many, many” programs the committee couldn’t fully fund, she said.
Elrich said he supported a smaller decrease than 7 percent, but had agreed to go along with that number.
The programs the council doesn’t fund are things that residents will directly feel, he said.
“We are still constrained,” Elrich said.
He said the county should focus on being more hospitable for businesses by fixing its permitting process to allow projects to get approved more quickly.
Riemer said that along with the energy tax’s incentive to reduce energy consumption, this budget marks the third straight year that the average resident’s county tax burden has gone down.
“This budget is already cutting taxes in real dollars,” he said.
Editor’s note: The original version of the story described the cut as a 7 percent cut in the energy tax. In fact, the 7 percent cut is a reduction in the increase to the energy tax.