Council wary of energy tax idea Many fear proposal by Schmoke would worsen flight from city

April 10, 1997|By Robert Guy Matthews and Eric Siegel | Robert Guy Matthews and Eric Siegel,SUN STAFF

The mayor's proposal to tax gas, electricity and other energy sources used in Baltimore households and businesses is garnering scant support from City Council members, who ultimately will decide whether the measure passes or fails in coming months.

Businesses around town began calculating yesterday the cost of the proposed energy tax on their operations, and many said it would have a noticeable effect.

Because the additional taxes would be part of monthly energy bills, Baltimore Gas and Electric Co. officials said yesterday, customers would blame the company, not the city, for the increase.

Many council members said yesterday that they were reluctant to back the broad-based measure -- which would impose levies of 8 percent on manufacturers, 2 percent on nonprofit organizations and 4 percent on households -- because it could fuel the city's continuing loss of population.

"At this point, I would rather look at cuts and some potential savings and see how we might make the best use of surpluses," said 3rd District Councilman Martin O'Malley, who heads the Taxation and Finance Committee.

Mayor Kurt L. Schmoke's budget officials said yesterday that the energy tax was needed to cover part of a projected $18.1 shortfall in the budget for the fiscal year that begins July 1.

Second District council members Paula Johnson Branch and Bernard C. "Jack" Young said they would not support the energy tax because of the effect it would have on nonprofit organizations.

The energy tax "could result in layoffs," Young said.

4th District Councilwoman Sheila Dixon, one of the few members who support the energy tax, said, "I have been a champion behind this for a long time."

Budget officials estimate that the energy tax would bring the city more than $13 million in the next budget year: $8.3 million more from households, $4.2 million from manufacturers and $800,000 from nonprofit organizations.

In fiscal 1999, which would be the first full year of the energy tax, it would generate $20.1 million, they said. The city already imposes an 8 percent energy tax on commercial businesses.

In Maryland, only Prince George's and Montgomery counties impose an energy tax like the one proposed by Schmoke.

Schmoke, who vowed not to raise the property tax because of pleas from city residents, would have to increase that tax by about 25 cents per $100 of assessed value to raise the same amount of money that the energy tax would raise.

The proposed energy tax would cost the average household about $52 more a year for fuel initially, budget officials estimated.

BGE officials said the typical Baltimore customer's bill totals $54.59 a month for electricity and $62.41 a month for gas.

"We are opposed to any tax that would put a burden on our customers and increase their energy bills," said Art Slusark, a BGE spokesman.

Schmoke has said in recent weeks that the city needed a big new revenue source to help cover future budget shortfalls. He said the energy tax was fairer than others because it would be more broad-based than such levies as the current parking and amusement taxes.

Businesses and nonprofit groups are likely to lobby the council against the proposed energy levy.

"What it does in a nutshell is increase our manufacturing expense," said Robert Rieman, manager of the General Motors plant in Southeast Baltimore. "Our utility costs are somewhat higher already [than those of many other GM plants] because of the nature of the beast on the East Coast. It puts us at a little more of a competitive disadvantage."

The cost of the proposed tax to the Johns Hopkins University and Health System, which includes Hopkins Hospital and the Bayview Medical Center, would be about $600,000 a year, Hopkins spokesman Dennis O'Shea said.

"I don't think it is clear where the money would come from," O'Shea said.

"It seems to us to be shortsighted," he said of the tax. "It fails to take into account significant ways nonprofits contribute to the city."

Gregory Andorfer, executive director and chief executive officer of the Maryland Science Center, said the tax would cost his nonprofit organization several thousand dollars a year that would have to come out of the budget for programs and teacher materials.

Last year, the council rejected the mayor's attempt to force nonprofits to pay a 4 percent energy tax that would have brought the city an additional $2.45 million annually.

"I think the same opposition will be out this year," Branch said.

Pub Date: 4/10/97

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