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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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