Montgomery County Executive Ike Leggett proposed doubling energy taxes and raising cell phone taxes by more than 50 percent to help close the county’s newly discovered$168 million budget hole.
Leggett argued for the tax increases and a number of other quick budget fixes on Thursday, two weeks before the County Council is scheduled to submit a final fiscal 2011 budget that closes a nearly $1 billion budget gap.
“You get to the point of diminishing return, where you have to decide whether it’s worth further reductions to services,” Leggett said. “We need to shift a little bit of this money … across the board.”
The county executive also suggested reducing the earned income tax credit by 33 percent, which would slash average annual credits from $530 to $353.
By Leggett’s calculations, doubling the energy tax would add about $100 annually to residential energy bills, and $3,360 to commercial energy bills. The tax increase would end at the end of fiscal 2012.
“If you just turn down the thermostat, you can avoid the tax,” he said. “I thought that was fair.”
Leggett’s revised budget also includes a $1 increase on the county’s $2 monthly cell phone levy. The energy and cell phone tax increases together would restore 70 percent of the county’s shortfall.
Leggett would dissolve the remaining $54 million gap by delaying a number of construction projects, reducing frequency of Ride On bus routes and combining park and county police.
His plan also depends on the council approving a measure to reduce Montgomery’s payments to county employees’ pensions, a switch from his previous position.
County employee union President Gino Rennesaid Thursday he will seek legal action against Leggett for his change of position.
Councilman Marc Elrich, D-at large, said Leggett’s recommendations brings the council “nowhere near solving this [budget] problem.”
Councilman Mike Knapp, D-Germantown, said the county executive’s plan depends too heavily on tax increases, and asked why the school system — which constitutes half of the county’s budget — wasn’t taking any hits.
“We’re only focusing on half the budget,” he said.
Leggett, who is expected to seek re-election this fall, responded, “This is not the year to impose on schools.”
Meanwhile, Councilman Roger Berliner, D–Bethesda suggested Montgomery secure additional revenue sources by taxing excessive carbon emissions.
Closing the gap Some new revenues and savings proposed by County Executive Ike Leggett:
$101 million: Energy tax increase
$11.9 million: Cell phone tax increase
$17 million: Fund balance transfers
$5.4 million: Earned income tax credit reductions
$2 million: Consolidation of park and county police
$1.9 million: Transit service reductions
$12,000: New parking meters at Bethesda library
