Friday, March 6, 2015

Governors plan would tax local utilities



Among Gov. Robert Bentley’s proposals for new tax revenue is a suggestion that could increase utility bills for more than 1 million Alabamians.
The governor’s plan, presented last week as part of a package to address a $700-million-plus budget deficit, included a provision to remove a tax exemption for city-operated water, gas and power companies.
Before that can happen, however, the plan, which would apply a 2.2 percent tax to city utility companies, would have to be approved by both houses of the Legislature.
Representatives of city utility companies said that if the Legislature approves the change, the added expense is likely to be passed on to customers.
The tax in question is the Public Utilities License Tax. It is paid by utility companies such as Alabama Power and Alagasco and is used to support the state’s General Fund and the Department of Mental Health. Companies pass the cost on to their customers.
The state exempts some utilities from paying the tax, including electric, gas and water companies operated by cities, and countywide water systems.
As a result, state residents served by city utilities are spared the 2.2 percent pass-through expense on their bills. Municipal utilities already pay a 4 percent tax on their gross receipts, as commercial utilities do.
The governor's plan would end the license tax exemption for municipal utilities. It’s not clear whether that would include county water authorities.
The news of a potential tax increase came as one local utility, the Anniston Water Works and Sewer Board, announced rate increases.
At the same time, Jacksonville’s water works, gas and sewer board is contemplating a rate increase to pay for needed water treatment plant repairs.
The new tax would likely add to both the increases in Anniston, and to any sewer rate increase in Jacksonville.
In addition, electric customers in Piedmont, who say they already face high utility bills would likely see an increase in costs with the implementation of the added tax. 

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