Cumberland Times-News

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January 31, 2013

Commissioners oppose attempt to kill state’s coal tax credit

Proposal threatens local economy, officials say

Matthew Bieniek Cumberland Times-News

CUMBERLAND — Allegany County commissioners sent a strongly worded letter to a key legislator opposing an attempt to kill the state’s coal tax credit. Commissioners voted to send the letter to Sheila Hixson, the chairman of the powerful House Ways and Means Committee, at their Thursday evening business meeting.

“Coal mining ... is an essential component of out local economy,” the letter stated.

The letter included a plea to consider the environmental implications of ending the tax credit, since the practice helps support reclamation of abandoned mines, commissioners said.

“... the proposal not only threatens our local economy, but it will directly impact the method by which the state relies to restore properties which were once mined and never reclaimed,” the letter states.

“Hopefully the bill will not make it out of committee,” Commission President Michael McKay said. Commissioner Creade Brodie Jr. said he thought it would be helpful to have towns like Lonaconing, Frostburg and Luke, whose economies to some extent depend on coal mining, to write a separate letter to Hixson.

The letter also cited the effect a decline in coal mining would have on small businesses in Allegany County. The Allegany County Chamber of Commerce has also sent a letter to Hixson.

Unlike other areas of the state, the immediate repeal of tax credits allowed for the purchase of Maryland-mined coal would have a direct effect on Western Maryland,” the chamber letter to Hixson reads. The letter points out that many companies have signed contracts anticipating the use of the tax credit.

Gov. Martin O’Malley supports the repeal of the coal tax credit in his 2014 budget, released last week. “Allegany and Garrett companies affected by this repeal, if unable to absorb these losses, will inevitably need to eliminate jobs,” the letter states.

Public service companies and a few other designated companies receive a $3-per-ton credit for purchasing Maryland-produced coal. The credit cannot pay a company anything over its tax liability for the year; it can only apply up to the limit of the tax liability.

The public service providers rebate part of their savings back to coal companies based on their contracts with the companies. The effect of the law, currently set to expire in 2021, is to encourage purchase of Maryland coal by Maryland companies.

The fiscal and policy note prepared in 2012 for the repeal bill by the nonpartisan Department of Legislative Services indicates a few million dollars in savings for the state should the credit be repealed early.

Contact Matthew Bieniek at mbieniek@times-news.com.

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