Just as he did last year, Gov. Martin O’Malley is attempting to end a tax credit that benefits the local coal industry. If he succeeds, the incentive to purchase Maryland coal will be substantially diminished.
Public service companies and a few other designated firms receive a $3-per-ton credit for purchasing coal that is mined in Maryland. The credit cannot pay a company anything over its liability for the year; it can only apply up to the limit of the tax liability. The public service providers then rebate part of their savings back to coal companies based on their contracts with the companies.
O’Malley’s new budget calls for eliminating the tax, which, unless it is repealed, is scheduled to be in effect until the end of 2020. If the legislature approves O’Malley’s repeal, the state’s General Fund probably would increase by $4.5 million, based on estimates issued by the state last year.
When the repeal was proposed last year, it was opposed by the local delegation in Annapolis. The lawmakers said the tax credit gives coal producers and consumers a slight edge in the coal market.
On Thursday the Allegany County commissioners will hear from the Maryland Coal Association about the implications of losing the tax credit. The commissioners are expected to write a letter opposing repeal of the tax.
According to the American Coal Foundation, more than $2 billion is pumped into the Maryland economy by the direct and indirect effects of coal production. Maryland stands 30th among the states in coal use and has more than a dozen mines in operation, including two underground mines, according to the foundation. About 57 percent of the energy in the state is produced by coal-fueled plants, the foundations said.
There are only two Maryland counties — Allegany and Garrett — that have coal production. Having the tax credit as a carrot to coal buyers helps the local economy and the employees who rely on their mining jobs.
Opinion
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