Cumberland Times-News

January 9, 2013

Battle over repeal of Maryland’s mined coal tax credit will return to Statehouse, according to local representatives

Matthew Bieniek
Cumberland Times-News

— CUMBERLAND — The rewind button will be pushed for a battle over the state’s mined coal tax credit in the 2013 General Assembly, which opened up its session Wednesday.

A bill to repeal the credit has already been filed, setting up a repeat of last year’s battle. The bill is House Bill 11, filed by Delegate Herb McMillan of Anne Arundel County.

Last year’s battle ended with the bill, filed in the House, unable to move forward after committee hearings. The repeal effort has been supported by Gov. Martin O’Malley’s administration during past attempts.

Local legislators said during prelegislative meetings with local officials and the public that they expect the bill to be introduced again. They say the credit is an important incentive for the local industry.

Calculating the credit is complicated but the basic principle is simple enough, Delegate Wendell Beitzel has said. 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, Beitzel said. The effect of the law, currently set to expire in 2021, is to encourage purchase of Maryland coal by Maryland companies.

The credit helps preserve jobs in the coal industry and helps provide a market for Maryland coal, local legislators have said. Coal production in Maryland is limited to Allegany and Garrett counties.

Around 300 to 400 people in Garrett County are employed in coal mining, county officials have said, with more indirect jobs being created by each mining job. Mining employs 600 people directly in the state and creates another 3,000 spin-off jobs, Adrienne Ottaviani, the executive director of the Maryland Coal Association, has said.

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Department of Legislative Services indicates a few million dollars in savings for the state should the credit be repealed early.

General fund revenues would increase by $4.5 million in fiscal 2013, according to the policy note.

“Accelerating the termination date increases state revenues by a total of $34.5 million through fiscal 2021,” the policy note states.

According to the American Coal Foundation, more than $2 billion are 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 16 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 foundation said.

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