AUGUSTA — City officials say a proposed bill before the Legislature could cost the city more than $200,000 a year in excise taxes paid by Central Maine Power.
Mayor William Stokes said that appears to be the company’s motivation for advocating for passage of the bill, which changes the rule that utilities pay excise taxes to the muicipality where their offices are, and instead pays them to the town or city where the vehicles are parked.
At issue is the city’s belief that CMP is upset because one of its sister entities, Maine Natural Gas, did not fare better in a bidding war to win city contracts against its chief rival, Summit Natural Gas of Maine.
Last year, Maine Natural Gas and Summit both submitted bids to deliver natural gas to city and school buildings in Augusta.
Summit was awarded the work after Maine Natural Gas officials withdrew their bid and accused the city of allowing Summit to change its prices after both companies submitted their proposals.
Maine Natural Gas and CMP are owned by the same parent company, Iberdrola USA.
“I can’t fathom why they’d flip-flop on their position on this, it doesn’t make any business sense for them,” Stokes said Friday. “The only explanation we can understand, for their motive, is dissatisfaction over natural gas.”
Central Maine Power officials deny that suggestion and said technological advances have made it easier to pay excise taxes to municipalities. They say paying excise taxes to the 13 other municipalities where their vehicles are located is the right thing to do as a good corporate citizen.
“We’re not doing this punitively to one city, it’s a matter of fairness to the other cities and towns where we have vehicles,” said John Carroll, a spokesman for CMP. “Right now we’re a very good corporate citizen in the city of Augusta. We’re trying to be an equally good corporate citizen in 13 other communities. It’s unusual that civic leaders would raise a question like this about one of their largest taxpayers and employers.”
Current law requires utilities to pay excise taxes on their vehicles in the municipality where their main offices are located.
City Manager William Bridgeo said in 2011 when the same basic bill was proposed to change where utilities pay excise taxes on the vehicles they register in Maine, CMP officials spoke against it, as did the city. The bill failed.
Bridgeo and Stokes said they can’t think of any reason CMP would change its stance on the issue, other than that they’d heard secondhand that company officials were upset by the city’s dealings with Maine Natural Gas.
The proposed bill, L.D. 1754, would allow utilities to instead pay excise taxes on company vehicles kept at other, permanent locations of the business to the municipality where those vehicles are kept.
For Augusta, home to CMP’s main offices, the stakes are high.
Ralph St. Pierre, finance director and assistant city manager, said CMP registers and pays excise taxes on about 500 vehicles to Augusta, generating $314,000 a year in excise tax revenues.
City officials aren’t sure how many vehicles CMP has outside Augusta, which it could register elsewhere if the bill passes, but they estimate the change could cost the city about $200,000 to $250,000 a year.
Carroll said CMP would still register 114 vehicles in Augusta if the law passes. While that would be a financial hit to Augusta, to go from the excise on 500 vehicles to just 114, Carroll noted it would provide new revenues to other municipalities. The list includes Portland, where CMP has almost 100 vehicles; Fairfield, where it has 35; Skowhegan, where it has 19; and Farmington, where it has 21.
Bridgeo said the financial hit to the city of Augusta would be large, while providing only a very modest financial gain to other communities across the state where CMP has vehicles.
The bill is sponsored by Rep. Lance Harvell, R-Farmington, who said CMP officials asked him to reintroduce the bill he sought to pass, unsuccessfully, in 2011.
“CMP has 20 trucks at a substation in Farmington,” Harvell said. “If this passes, Farmington would be able to see that excise tax. If you have these vehicles in town the majority of the year, you ought to pay excise taxes here.”
Bridgeo said it doesn’t make sense for CMP officials, who spoke against the same bill in 2011, to now support it.
He said CMP’s claim it is now in favor of the bill because it is easier to register vehicles where they are located, “is a head scratcher for me.”
He said Augusta works with CMP to allow it to write a single check for all its vehicle registrations.
“Nothing could be easier, from a corporate perspective, than being able to register every single vehicle in Maine in one location,” Bridgeo said, noting the city issues CMP its vehicle registrations, sends them the bill, and allows them to register the vehicles before the bill is paid. “This is the only entity we’ve ever done this for, because of their size and number of vehicles. We’ve waited up to 60 days for payment. Nobody else gets that business-friendly treatment.”
St. Pierre also said registering vehicles in each municipality where they are kept is much less efficient than registering them all with one municipality, all at the same time.
City officials provided what they said was CMP lobbyist David Allen’s testimony, in 2011, against the previous version of the bill, in which he said “This is one bill that would make it more difficult and more expensive to do business here, and the additional administrative burden and commensurate expenses would, of course, be passed on to our customers.”
Carroll said the logistical challenges of registering vehicles in multiple locations aren’t the challenges they were three or four years ago. And, he said, it’s more fair because CMP vehicles kept in other municipalities add wear and tear to the roads where they are located.
“We want to make sure we’re fair to other communities, that’s what this is,” Carroll said. “If they’re feeling there is something else behind this (regarding the city’s relationship with Maine Natural Gas) then ask them why they’re feeling that way.”
Carroll said CMP will still bring financial benefits to the city of Augusta, particularly in the $1.33 million it pays each year in property taxes.
The issue is slated to come to a head in two weeks before the Legislature’s Taxation Committee. A public hearing on the proposed bill is scheduled for 1 p.m. March 12.
Keith Edwards – 621-5647 email@example.com