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Montgomery County Businesses Decry Energy Tax Extension

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Business groups in Montgomery County are railing against an extension of an increase in the county's energy tax.

The 85 percent increase was first approved two years ago, at the height of the economic downturn. It's supposed to recede, or sunset, back to its 2010 level this summer. But county executive Isiah Leggett is asking the county council to extend the increase indefinitely, saying it is a broad-based revenue source that the many federal institutions in the county must also pay.

The proposal has the business community upset.  During a council public hearing last night, Heather Dlhopolsky of the Bethesda-Chevy Chase Chamber of Commerce said unlike two years ago, the tax increase isn't needed to close a budget shortfall.

"This year's proposal is being used to help fund a spending increase -- an increase which is both fiscally irresponsible and fundamentally unfair to businesses who have made it this far intact, and have believed for the past two years there was at least some good news at the end of FY12," Dlhopolsky said.

Business groups also argued leaving the tax hike in effect will hurt the ability to attract new companies, especially the high-tech firms the county covets. 

"The county's energy tax disproportionately impacts the industries of life sciences and high-tech which the county targets for growth," said Jonathan Sachs of the Montgomery County Chamber of Commerce. "Hospitals and tech companies individually pay the highest for the additional energy costs, averaging close to $500,000 each."

Without the money raised by the tax hike, Leggett says council members would have to find $114 million in additional revenue or cut that money from his budget proposal. That budget includes the hiring of more police officers and a one-time bonus of $2,000 to most county employees — bonuses the county executive says are a reward to workers who have endured furloughs and forgone pay increases the past four years. 

But Shaun Pharr of the Apartment and Office Builders Association of Metro Washington pointed out that council members in other jurisdictions in the area are not increasing their spending at the same level Leggett wants to.

"You're being asked to renege on a sunset commitment in order to fund an increase in taxpayer-supported funding of 5.5 percent when the still-uncertain economy is not allowing your constituent businesses and citizens to increase their spending by 5.5 percent," Pharr said.

Tax activist Robin Ficker also spoke, announcing he was collecting signatures for a potential voter referendum for a measure that would limit any yearly increase in the energy tax to no higher than the rate of inflation.

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