SCM, Baltimore in dispute

December 11, 1992|By Michael A. Fletcher | Michael A. Fletcher,Staff Writer

SCM Chemicals Inc. is embroiled in a dispute with Baltimor over $1.1 million in utility taxes that the city says SCM has skirted by maintaining utility meters for the company's giant South Baltimore plant in Anne Arundel County.

"The issue is that the electricity at the plant is being used in the city of Baltimore," said Allan Reynolds, the city auditor. "The meter was placed in the county to avoid the city tax."

Mr. Reynolds says SCM's power lines run through the plant, which is in the city, out to the meters in Anne Arundel County and back into the factory. The chemical plant, one of the largest employers in the city, manufactures paint pigment.

When utility meters were installed at the plant, Anne Arundel County had a lower utility tax rate than did the city, Mr. Reynolds said. But since 1986, the city has been phasing out its utility tax for large manufacturing companies, and the city's rate is now lower than Anne Arundel's, he said.

SCM said the meters have been in place since the mid-1950s.

"We don't owe anything," said Stuart Breslow, assistant general counsel for SCM. "We've been paying Anne Arundel County for years. This is a sales tax on electricity, and the sale is consummated in Anne Arundel County."

The city has been attempting to collect the $1.1 million -- the amount of money the city claims the company owes for utility taxes between 1987 and 1991 -- for almost a year. But city officials claimed they were unable to engage the corporation in negotiations until SCM approached the Board of Estimates this week seeking approval to refinance $17 million in bonds.

The board approved the refinancing deal in principle, contingent on SCM negotiating with the city over the utility tax. The bond refinancing deal is before the City Council.

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