AGENDA ITEM 3.8
March 23,2010
Introduction
MEMORANDUM
TO:
FROM:
SUBJECT:
County Council
tichael Faden, Senior Legislative Attorney
Introduction:
Expedited Bill 15-10, Taxation - Fuel-Energy Tax - Rate and
Resolution to change fuel/energy tax rates
Expedited Bill 15-10, Taxation - Fuel-Energy Tax - Rate, and the alternative resolution
to change the fuel/energy tax rates, sponsored by the Council President at the request of the
County Executive, are scheduled to be introduced on March 23,2010.
This Bill and resolution would increase the rates of the fuel-energy tax by 39.6% to raise
an estimated additional $50 million in FYll. For current energy tax revenue data, see the budget
table on ©9.
The public hearing on this Bill and resolution is scheduled for May 4 at 1:30 p.m.
This packet contains:
Expedited Bill 15-10
Legislative Request Report
Memo from County Executive
Resolution
Rate schedule
Revenue data
Circle
#
1
5
6
9
10
11
F:\LAW\BILLS\IOI5 Fuel Energy Tax\intro Memo.Doc
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Expedited Bill No.
15-10
Concerning: Taxation - Fuel-Energy
Tax - Rate
Revised:
3-22-10
Draft No.
_1_
Introduced:
March
23,2010
Expires:
September
23, 2011
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: --'-"N....,on""e=-:-_=--_ _ __
Ch.
Laws of Mont. Co. _ _-..,­
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request of the County Executive
AN EXPEDITED ACT
to:
(1)
increase the rates of the fuel-energy tax; and
(2)
generally amend County laws related to the fuel-energy tax.
By amending
Montgomery County Code
Chapter 52. Taxation
Section 52-14. Fuel-energy tax
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
...
... ...
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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EXPEDITED BILL
No. 15-10
1
2
Sec.
1.
Section 52-14 is amended as follows:
52-14. Fuel-energy tax.
3
4
(a)
A tax is levied and imposed on every person transmitting, distributing,
manufacturing, producing, or supplying electricity, gas, steam, coal,
fuel oil, or liquefied petroleum gas in the County. Beginning on July
1,.
2010, the tax rates in dollars are:
5
6
7
8
ill
For
fuel-energy
transmitted,
distributed,
manufactured,
produced, or supplied for residential and agricultural purposes:
FUEL-ENERGY
Electricity
~
kilowatt hr)
!
TAX RATE
$0.0072924198
$0.0628010617
$0.0822605134
$18.6267531744
Natural Gas
~
therm)
Steam
~
therm)
Coal~ton)
Fuel oil
~
gallon):
·No.l
INo.~
$0.0899987212
$0.0933631594
$0.0933631594
$0.0955500442
$0.0974004852
$0.0995873700
$0.0135686262
distributed,
manufactured,
No.3
--
No.1
No.
~
No.6
--
Liguefied petroleum gas
~
pound)
9
10
ill
F or
fuel-energy
transmitted,
produced, or supplied for non-residential purposes:
FUEL-ENERGY
Electricity
~
kilowatt hr)
I
TAX RATE
• $0.0193251926
F:\lAWlBILLS\1 015 Fuel Energy Tax\BiII 1.DOC
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EXPEDITED BILL
No. 15-10
I
Natural Gas
~
thenn}
Steam
~
thenn}
Coal~ton)
$0.1664230814
$0.2179903605
$49.3578373320
i
Fuel oil
~
gallon):
No.1
No.2
No.J
No.4
No.~
$0.2384966112
$0.2474123724
$0.2474123724
$0.2532076172
$0.2581112858
$0.2639065305
$0.0359568595
No.6
Liguefied ,getroleum gas
~
,gound)
11
12
The County Council [must] may set the rates for various fonns of fuel
and energy by resolution adopted according to the requirements of
Section 52-17(c). The Council may, from time to time, revise, amend,
increase, or decrease the rates, including establishing different rates
for fuel or energy delivered for different categories of final
consumption, such as residential or agricultural use. The rates must
be based on a weight or other unit of measure regularly used by [such]
persons in the conduct of their business. The rate for each fonn of
fuel or energy should impose an equal or substantially equal tax on the
equivalent energy content of each fonn of fuel or energy for a
particular category of use. The tax does not apply to the transmission
or distribution of electricity, gas, steam, coal, fuel oil, or liquefied
petroleum gas in interstate commerce through the County if the tax
would exceed the taxing power of the County under the United States
Constitution. The tax does not apply to fuel or energy converted to
13
14
15
16
17
18
19
20
21
22
23
24
25
F:\LAWlBILLS\1015 Fuel EnergyTax\BiII1.DOC
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EXPEDITED BILL
No. 15-10
26
27
another form of energy that will be subject to a tax under this Section.
The tax must not be imposed at more than one point in the
transmission, distribution, manufacture, production, or supply system.
The rates of tax apply to the quantities measured at the .point of
delivery for final consumption in the County.
28
29
30
31
32
33
34
*
Sec. 2. Expedited Effective Date.
*
*
The Council declares that this legislation is necessary for the immediate
protection of the public interest. This Act takes effect on the date when it becomes
law.
Approved:
35
. 36
37
38
39
40
41
42
43
44
45
Nancy Floreen, President, County Council
Approved:
Date
Isiah Leggett, County Executive
This is a correct copy ofCouncil action.
Date
46
47
Linda M. Lauer, Clerk of the Council
Date
F:\lAw\BILLS\1
015
Fuel Energy Tax\BiII1.DOC
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LEGISLATIVE REQUEST REPORT
Expedited Bill 15-10
Taxation - Fuel-Energy Tax Rate
DESCRIPTION:
PROBLEM:
This Bill would increase the rates of the fuel-energy tax.
In order to meet current fiscal challenges facing the County, the County
must increase the amount of revenue available to maintain core
Government programs and services.
To enhance the amount of revenue available to support core government
programs and services.
GOALS AND
OBJECTIVES:
COORDINATION:
Office of Management and Budget; Department of Finance
FISCAL IMPACT:
To be requested.
ECONOMIC
IMPACT:
EVALUATION:
To be requested.
Subject to the general oversight of the County Executive and the County
Council.
EXPERIENCE
ELSEWHERE:
SOURCES OF
INFORMATION:
Joseph Beach, Director of Management and Budget
Kathleen Boucher, Assistant Chief Administrative Officer
APPLICATION
Tax laws apply County-wide.
WITHIN
MUNICIPALITIES:
PENALTIES:
N/A
F:\LAW\BILLS\\OI5 Fuel Energy Tax\LRROOC
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OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE. MARYLAND 20850
lsiah Leggett
County Executive
MEMORANDUM
March 18,2010
\
TO:
FROM:
SUBJECT:
Nancy Floreen, Council President
Isiah Leggett, County
Executive~~;;#:J
,/?
i.
....
...
-";
FY 2011 Budget Reconciliation and Financing Act
I am attaching for Council's consideration a Budget Reconciliation and Financing
Act (BRF A) which makes changes to the County Code that are necessary to reconcile my
recommended FY 2011 operating budget with projected FY 2011 revenues. This bill will help
the County address its current fiscal challenges by increasing the amount of revenue available to
maintain and enhance core government programs and services. I am also attaching a Legislative
Request Report for the bill. A Fiscal Impact Statement will be transmitted to Council soon.
The BRF A consists of five primary components. First, it increases the energy tax
rates. Second, it temporarily redirects the portion of recordation tax revenues that are currently
reserved for County Govenunent capital projects and rental assistance programs to the general
fund for general purposes. Third, it allows revenues generated by the Water Quality Protection
Charge to be used to pay debt service on bonds that fund stonnwater management infrastructure
projects. Fourth, it transfers responsibility for administering equal employment opportunity
programs from the Office of Human Resources to the Office of Human Rights. Fifth, it
authorizes the Fire and Rescue Service to impose an Emergency Medical Services (EMS)
Transport Fee.
As the Council knows, the County's energy tax is actually a tax on fuel oil,
natural gas, and electric utility providers which is passed on to all utility customers. Because the
energy tax is a broad-based tax, its impact on families is reduced by the fact that it is paid by
businesses and households, and all levels of government, including federal agencies located in
the County (that currently do not pay any other major County tax). Additionally, the energy tax
is a consumption tax based on energy usage.
It
is not based on the overall size of the utility bill
or the cost per unit of energy used as billed to the consumer. Therefore, the amount of the tax
can be lessened by reduced energy usage. Based on existing usage patterns for the average
homeowner, my recommended FY 2011 budget assumes an average increase in the energy tax of
approximately $2.90 per month. I have also recommended additional funding in the Health and
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Nancy Floreen, Council President
March 18,2010
Page 2
Human Services budget for the County's Energy Assistance Program to minimize the impact to
low-income households.
My recommended FY11 budget contains several efforts to restructure County
Government to improve responsiveness and efficiency. One ofthese changes is the transfer of
the Equal Employment Opportunity program from the Office of Human Resources to the Office
of Human Rights. This shift takes advantage of existing staff resources to reduce costs and
leverage the efforts of County staff to produce better outcomes for the community. This bill
modifies the County code provisions relating to the responsibilities of the Office of Human
Resources and Office of Human Rights to reflect this change.
The EMS Transport Fee is needed to fund fire and rescue services in the County.
Without this fee, emergency response to residents will be impaired. EMS Transport Fees are
widely employed throughout the nation and by local governments throughout the Washington
region. These jurisdictions have not experienced any indication that people decline to use
emergency transports as a result of the imposition of an ambulance fee. By creating a prepaid
fund for uninsured County residents, the legislation that I am transmitting imposes a fee only on
County residents with health insurance which covers EMS Transports. This arrangement more
equitably distributes the economic burden of providing EMS transport services in the County
between residents and nonresidents. The legislation provides for a hardship waiver for
nonresidents who fall below 300 percent of federal poverty guidelines.
To provide the Council with a complete picture of the EMS Transport Fee
program created by this bill, I am attaching a copy of the proposed Executive Regulation to
implement the fee. This proposed regulation will be published in the April 2010 County Register
and submitted to Council after the 30-day public comment period ends on April 30.
Finally, I note that the BRFA is consistent with Bill 31-09, Consideration of
Bills - One Subject (enacted on September 29,2009), which requires that a bill "contain only
one subj ect matter".' As noted in the Council staff packet for Bill 31-09, that bill was intended to
adopt the "one subject rule" of the Maryland Constitution, which requires all laws enacted by the
General Assembly to contain only one subject. The Maryland Attorney General has repeatedly
concluded that budget reconciliation and financing bills do not conflict with the one subject rule.
For example, in 2005, the Attorney General noted that "[£]or the past fourteen years, 15 budget
reconciliation, budget reconciliation and financing acts or variations thereof, have been used to
balance budgets, raise revenue, make fund transfers, redistribute funds, cut mandated
appropriations and authorize or mandate appropriations."] The Attorney General concluded that
all of those bills were consistent with the one subject rule because the provisions of the bills were
"clearly germane to the single subject of financing State and local government".
See Panitz v.
Comptroller a/the Treasury,
247 Md. 501 (1967) (Omnibus supplemental appropriation bill
comprised a single subject for purposes of § 29 of
Art
III of the State Constitution even though
See May 19, 2005 memorandum from Attorney General J. Joseph Curran, Jr. to Governor Robert Ehrlich regarding
House Bi11147 (2005).
.
I
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Nancy Floreen, Council President
March 18, 2010
Page 3
the bill combined such diverse elements as police aid to local government; teacher salaries and
pensions; and general unrestricted grants to local government).
Attachments (3)
cc:
Joseph Adler, Director, Office of Human Resources
Jennifer Barrett, Director, Finance Department
Joseph Beach, Director, OMB
Kathleen Boucher, ACAO
Richard Bowers, Fire Chief, MCFRS
Marc Hansen, Acting County Attorney
Robert Hoyt, Director, DEP
Richard Y. Nelson, Jr., Director, DHCA
J ames Stowe, Director, Office of Human Rights
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Resolution No. _ _
---:~-:--:-::--_
Introduced:
March 23,2010
Adopted: _ _ _ _ _ _ _ _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President
SUBJECT:
Fuel/energy tax
rates
Background
1,
Section 52-14 of the County Code levies a tax on persons transmitting, distributing,
manufacturing, producing, or supplying electricity, gas, steam, coal, fuel oil, or liquefied
petroleum gas in the County.
Section 52-14 also provides that the County Council may amend the fuel/energy tax rates
by resolution, after a public hearing advertised as required by Section 52-17. A public
hearing was held on this resolution on (date).
The Council finds that
it
is fair and equitable to continue different rates for fuels and
energy transmitted, distributed, manufactured, produced, or supplied for residential and
agricultural purposes and for non-residential purposes.
Action
2.
3.
The County Council for Montgomery County, Maryland, approves the following resolution:
L
2.
On and after July 1, 2010, the fuel/energy tax rates levied under Section 52-14 of the
County Code are as shown on Schedule A, attached to this resolution.
This Resolution supersedes Resolution 16-553.
This is a correct copy ofCouncil action.
Linda M. Lauer, Clerk of the Council
Date
F:\LAW\BILLS\1011 Budget Reconciliation And Financing Act\l 0 15 Fuel Energy Tax\FYll Draft Resolution.Doc
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Attachment
Resolution No:
SCHEDULE A (starting July 1,2010)
(a) For fuel-energy transmitted, distributed, manufactured, produced, or supplied for residential
and agricultural purposes:
FUEL-ENERGY
TAX RATE
$0.0072924198
$0.0628010617
$0.0822605134
$18.6267531744
$0.0899987212
$0.0933631594
$0.0933631594
$0.0955500442
$0.0974004852
$0.0995873700
$0.0135686262
No.2
No.3
No.4
No.5
No.6
(b) For fuel-energy transmitted, distributed, manufactured, produced, or supplied for
non-residential purposes:
i
FUEL-ENERGY
Electricity (per kilowatt hr)
Natural Gas (per therm)
Steam (per therm)
Coal (per ton)
Fuel oil (per gallon)
No.1
No.2
No.3
No.4
No.5
No.6
Liquefied petroleum gas (per pound)
$0.0193251926
$0.1664230814
$0.2179903605
$49.3578373320
$0.2384966112
$0.2474123724
$0.2474123724
$0.2532076172
$0.2581112858
$0.2639065305
$0.0359568595
F:\LA W\BILLS\l 015 fuel energy tax\
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SCHEDULE C-2
Revenues Detailed
By
Agency
Actual
FY09
Budget
FY10
Estimated
FY10
Recommended
FY11
%
Chg
Bud/Ree
3.0%·
-JO.5%!
SpecIal Funds Non-Tax Supported
Enterprise Fu"ds Non-Tax Supported
TOTAL M-NCPPC
275,448
12,326,760
J22,395,J5J
575,000
14,150,000
J23,746,840
575,000
12,409,600
J2J,2J9,OJO
575,000
14,578,300
JJO,709,6JO
OTHER
SUMMARY
1
GRAND TOTAL ALL FUNDS/AGENCIES
4,238,144,349
4,475,519,832
4,299,713,704
4,443,966,271
.0.7%i
SCHEDULE C-3
Revenues Detailed
By
Agency, Fund and Type
Actual
FY09
Budget
FY10
Estimated
FY10
Recommended
FY11
%
Chg
Bud/Ree
TAX SUPPORTED
MONTGOMERY COUNTY GOVERNMENT
C••nty General F.nel
Taxes
Properly Toxes
Countywide Tax ..
Storm Drainage Tax
Tax Rebate
Income Tax Offset Credit
New 8usiness Incentive Tax Credit
1
County Homeowner Tax Credit Program
Penalties and Interest on Taxes
Property Tax Electric Deregulation
Prior Year Tax
Other
Toxes
County Income Tax
Real Property Transfer Tax
Recordation Tax Premium
Recordation Tax
_§olar
Tax Credit
Energy Tax
Telephone Tax
Hotel/Motel Tax
--;'dmissions Tax
TOTAL TAXES
m
1,103,000,368
3,767,095
-142,295,619
1,217,556,500
4,481,190
-168,942,072
1,211,041,980
4,454,790
.167,612,040
1,249,091 ,200
4,502,330
2.6%
0.5%
o
.168,814,443
-4,026,150
-1,896,331
1,478,098
277,673
, ,
2039721
1,160,880,000
75,650,000
8,221,000
51,020,000
·500,OO()
185,120,000
30,589,000
17,353,000
2,043,000
2,6
J
3,028,098
0.7%
l.5%
-0.1%
-50.0%
a
-2,616,227
-952,394
1,370,122
45962
,
o
-4,000,000
.1,867,619
1,479,356
555,345
2039721
, ,
1,214,770,000
64,970,000
6,509,000
51,880,000
-500,000
130,360,000
32,840,000
20,014,000
2,130,000
2,574,275,421
o
-4,000,000
-3,197,651
1,479,356
555,345
2039721
,
,
1,094,555,000
68,670,000
0
46,121,000
-500,000
132,194,000
29,542,000
15,813,000
2,058,000
2,433,2
J
4,50
J
°
1,291,716,935
64,771,739
°
°
129,328,307
42,437,217
30,906,025
16,829,254
2,169,201
2,540,477,985
-4.4%
16.4%
26.3%'
.1.7%
-
42.0%
·6.9%
-13.3%
-4.1%
..
~
Licenses
&
Permits
Business Licenses
Hazardous Materials Permits
Traders Licenses
Miscellaneous - landlord-Tenant
Clerk of the Court Business Licenses
Burglar Alarm Licenses
Other Business licenses
Public Health licenses
Non-Business
Licenses
Residential Parking Permits
Marriage License\Ceremony Fees
Marriage licenses-Battered Spouses
Other Non-Business licenses
Pet Animal Licenses
683,432
735,338
155
239,386
77,740
4,467,736
2,263,481
165,925
65,358
248,566
2,800
351,890
700,000
780,000
15,000
215,000
67,030
4,414,390
2,171 ,920
125,000
67,000
300,000
0
277,040
928,000
780,000
0
215,000
70,000
4,553,610
2,209,650
185,000
67,000
250,000
0
369,300
700,000
780,000
215,000
67,000
4,549,260
2,209,650
185,000
67,000
250,000
0
369,300
-
-
-:
°
-
0.0%.
3.1%
1.7%1
48.0%.
-
-16.7%
-
33.3%
71-2 Budget Summary Schedules: Revenues
FYII Operating Budget and Public
SefVices
Program FYll·16