'High' tax on energy concerns residents
Like many Utahns, Caryl Jarman was shocked when she opened her
January natural gas bill.
Adding to her shock was the fact that city and state taxes made up nearly 10 percent of the $243.47 total.
Jarman, who had moved from Syracuse, N.Y., to a three-bedroom home above the state Capitol, said city and state governments are reaping a windfall as soaring energy prices squeeze consumers.
Jarman's natural gas bill included a franchise fee at 2 percent, Utah sales tax at 3.85 percent and a municipal energy tax at 4 percent.
"I don't see any reason for them to be so high," Jarman said. "If this continues we'll go back to New York. It's ridiculous."
According to data provided Tuesday by the Utah House Public Utilities and Technology Standing Committee, total taxes collected from electric and natural gas charges in the state rose to $94.7 million in 2004, up 33 percent from $70.9 million collected in 2001.
And those numbers don't include tax revenues from energy use reaped by local governments in 2005, when natural gas rates climbed 38 percent compared to 2004. Since state and municipal taxes on utility bills are a percentage of the total bill, the higher one's bill climbs, the more money city and state treasuries receive.
Lincoln Shurtz, legislative analyst for the Utah League of Cities and Towns, told legislators on Tuesday that 123 of 242 cities across the state impose some energy sales and use tax.
Of those 123, 41 cities have a rate less than the maximum 6 percent they can impose. Counties are not allowed to impose the tax on residents living in unincorporated areas.
"Of the roughly 2.4 million people in Utah, 1.7 million are subject to some energy sales and use tax," Shurtz said. "And of that number, 1.4 million are subject to the max rate at 6 percent."
Shurtz suggested that the state should consider lowering its 2 percent energy tax, which is imposed on all residents. He added that six cities are in the process of rolling back the tax or are in discussions to do so.
Tom Hardy, city manager for Bountiful, said even with rising natural gas rates, Bountiful has not seen a corresponding increase in revenues.
Hardy said the city's revenues from taxes on natural gas rose to $798,000 in fiscal year 2005, an 8 percent increase from $738,000 collected in fiscal year 2000-2001. But as prices rise, Hardy said, residents conserve. He pointed to the recent drought when residents were asked to conserve water.
"We lost almost $600,000 in revenues because our citizens responded to the call for conservation," said Hardy, who added that mild winters also could be a contributing factor in less energy taxes realized.
If Bountiful decreased its energy tax from 6 percent to 5 percent on electricity and natural gas, he said, the city would lose $340,000.
Lee King, representing Midvale, said that city realized a 15 percent rise in tax revenues from natural gas in the first five months of fiscal 2006 compared to the same five months in fiscal 2005.
"There's a perception that the cities are getting a large windfall and that we're getting a 40 percent increase," King said. "Well, it doesn't work that way, because most people will conserve. They turn back that thermostat."
However, Mike Jerman, vice president of the Utah Taxpayers Association, said as the decatherm price for natural gas increases substantially, so too are the increases in corresponding revenues off energy taxes.
"We support a mechanism that will lower the rate as the decatherm rate goes up," Jerman said. "Cities are taking these increased revenues and building them into their base budgets. If rates go down in a couple of years, they're not going to have that money. What they'll say is, 'We're not getting what we used to get off the natural gas utility franchise fees, so we have to raise your property taxes.' "
Leslie Reberg, executive director of the state's Committee of Consumer Services, charged with looking out for the interests of residential customers, agrees that the state and cities are collecting a windfall off increasing natural gas prices.
"No one should be capitalizing on consumers paying their utility bills," Reberg said. "There are additional monies flowing into cities while consumers are having to suffer the consequences of price volatility in the natural gas market."
Adding to her shock was the fact that city and state taxes made up nearly 10 percent of the $243.47 total.
Jarman, who had moved from Syracuse, N.Y., to a three-bedroom home above the state Capitol, said city and state governments are reaping a windfall as soaring energy prices squeeze consumers.
Jarman's natural gas bill included a franchise fee at 2 percent, Utah sales tax at 3.85 percent and a municipal energy tax at 4 percent.
"I don't see any reason for them to be so high," Jarman said. "If this continues we'll go back to New York. It's ridiculous."
According to data provided Tuesday by the Utah House Public Utilities and Technology Standing Committee, total taxes collected from electric and natural gas charges in the state rose to $94.7 million in 2004, up 33 percent from $70.9 million collected in 2001.
And those numbers don't include tax revenues from energy use reaped by local governments in 2005, when natural gas rates climbed 38 percent compared to 2004. Since state and municipal taxes on utility bills are a percentage of the total bill, the higher one's bill climbs, the more money city and state treasuries receive.
Lincoln Shurtz, legislative analyst for the Utah League of Cities and Towns, told legislators on Tuesday that 123 of 242 cities across the state impose some energy sales and use tax.
Of those 123, 41 cities have a rate less than the maximum 6 percent they can impose. Counties are not allowed to impose the tax on residents living in unincorporated areas.
"Of the roughly 2.4 million people in Utah, 1.7 million are subject to some energy sales and use tax," Shurtz said. "And of that number, 1.4 million are subject to the max rate at 6 percent."
Shurtz suggested that the state should consider lowering its 2 percent energy tax, which is imposed on all residents. He added that six cities are in the process of rolling back the tax or are in discussions to do so.
Tom Hardy, city manager for Bountiful, said even with rising natural gas rates, Bountiful has not seen a corresponding increase in revenues.
Hardy said the city's revenues from taxes on natural gas rose to $798,000 in fiscal year 2005, an 8 percent increase from $738,000 collected in fiscal year 2000-2001. But as prices rise, Hardy said, residents conserve. He pointed to the recent drought when residents were asked to conserve water.
"We lost almost $600,000 in revenues because our citizens responded to the call for conservation," said Hardy, who added that mild winters also could be a contributing factor in less energy taxes realized.
If Bountiful decreased its energy tax from 6 percent to 5 percent on electricity and natural gas, he said, the city would lose $340,000.
Lee King, representing Midvale, said that city realized a 15 percent rise in tax revenues from natural gas in the first five months of fiscal 2006 compared to the same five months in fiscal 2005.
"There's a perception that the cities are getting a large windfall and that we're getting a 40 percent increase," King said. "Well, it doesn't work that way, because most people will conserve. They turn back that thermostat."
However, Mike Jerman, vice president of the Utah Taxpayers Association, said as the decatherm price for natural gas increases substantially, so too are the increases in corresponding revenues off energy taxes.
"We support a mechanism that will lower the rate as the decatherm rate goes up," Jerman said. "Cities are taking these increased revenues and building them into their base budgets. If rates go down in a couple of years, they're not going to have that money. What they'll say is, 'We're not getting what we used to get off the natural gas utility franchise fees, so we have to raise your property taxes.' "
Leslie Reberg, executive director of the state's Committee of Consumer Services, charged with looking out for the interests of residential customers, agrees that the state and cities are collecting a windfall off increasing natural gas prices.
"No one should be capitalizing on consumers paying their utility bills," Reberg said. "There are additional monies flowing into cities while consumers are having to suffer the consequences of price volatility in the natural gas market."
E-mail: danderton@desnews.com
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