AUGUSTA — A bill that could cost the city of Augusta about $200,000 a year but bring other municipalities a share of that revenue drew accusations of retribution by legislation and unfairness in taxation on Wednesday.
A bill backed by Augusta-headquartered Central Maine Power Co., which under current law registers and pays about $300,000 a year in excise tax on nearly 500 company vehicles to the city of Augusta, instead would have utilities pay excise taxes where their vehicles are located.
A CMP lobbyist told the Taxation Committee the company backs the change, which it opposed in identical legislation in 2011, because it would distribute more fairly CMP’s excise tax payments to the municipalities where those vehicles spend the most time on local roads.
However, Augusta city officials and local legislators said CMP’s motivation for requesting the emergency bill is purely one of retribution. They said CMP is seeking to manipulate the Legislature by backing the bill to punish the city for how it dealt with Maine Natural Gas when the city sought to procure natural gas for city facilities. The city selected Summit Natural Gas to provide the fuel to city facilities when Maine Natural Gas withdrew its bid after the city allowed Summit to change its prices after bids were submitted.
Maine Natural Gas and CMP are both owned by Iberdrola USA. Local officials allege the parent company has been commingling business between the two companies improperly by using CMP’s clout to try to exact revenge for the city’s perceived mistreatment of Maine Natural Gas.
“It’s important for the committee to realize what’s really going on here. The only reason this bill is before you is CMP is mad it didn’t get its way on various natural gas contracts,” said Rep. Matthew Pouliot, R-Augusta. “Conversations between CMP and municipal officials made it clear CMP would take punitive action. This is it.”
Leaders from Fairfield and Farmington testified in favor of the bill, saying it would fix what they said is the unfair situation of the city of Augusta getting all the excise taxes from CMP vehicles.
“Excise is meant to be paid locally, to help offset the cost of road maintenance,” said Robert Sezak, Town Council chairman in Fairfield, where CMP keeps 38 vehicles, including bucket trucks. “I recognize the change would benefit some municipalities but also translate into a loss to the city of Augusta. But as a matter of fairness, I can see no rationale for having utilities register vehicles in a community other than where they are located. A single municipality shouldn’t benefit simply because that’s the way it has always been done.”
Sponsor Rep. Lance Harvell, R-Farmington, sponsored an essentially identical bill in 2011, which CMP opposed and the Legislature rejected.
Harvell said he ran into now-former CMP lobbyist David Allen this year and Allen suggested Harvell’s 2011 proposal should be resubmitted, and the company would support it. Because Allen had spoken personally against the same bill in 2011, describing it as bad for Maine businesses and increasing administrative costs that might have to be passed on to CMP ratepayers, Harvell said at first he thought Allen was joking. He said Allen then explained the company was in favor of the change now because paying excise taxes where company vehicles are kept would make the process in Maine uniform with how the company pays excise taxes elsewhere.
Joel Harrington, manager of government and community relations for CMP, said the proposed law change would bring tax equity to the more than a dozen communities across the state where CMP keeps vehicles. He said the tax revenue would go properly to the municipalities where CMP vehicles contribute to the wear and tear on local roads.
“The way it is now, communities fortunate to have (a utility’s headquarters within their borders) receive millions each year for property taxes on the utility’s property and buildings and receive 100 percent of the excise tax revenue for vehicles not necessarily located in that municipality,” Harrington said. “That prevents companies like CMP from investing ratepayer dollars back into the communities where our employees live and work.”
Taxation Committee member Rep. L. Gary Knight, R-Livermore Falls, told Harrington all the arguments he gave in favor of the bill Wednesday “were just the opposite of what was given (by CMP officials) three years ago. So I find your testimony somewhat confusing. Maybe you’ve seen the light?”
Harrington, who has worked for CMP for four months, said businesses, and legislators, change their minds sometimes. He said when CMP opposed the bill, the company didn’t know what financial effect it would have on the company. He said the company has studied it since then and thinks the effect will be minor and offset by improved community relations with municipalities where it keeps vehicles.
While the bill may improve relations with some communities, it inspired the Augusta City Council to support a strongly worded resolve blasting CMP and the proposed bill, claiming the company is backing the bill to punish the city for its choice of a natural gas supplier. Ward 3 Councilor Patrick Paradis read the resolve to legislators Wednesday.
Paradis, a former 16-year state legislator, said the bill was CMP’s attempt to involve the Legislature in a dispute between a company and a municipality, which would be bad public policy. He said the issue would be handled best by the state Public Utilities Commission.
Stephen Langsdsorf, Augusta’s city attorney, filed a 10-customer complaint Tuesday with the PUC, alleging CMP improperly used CMP resources, potentially at ratepayer expense, to wage its battle of retribution against the city on behalf of its partner company Maine Natural Gas.
Langsdorf said CMP President Sara Burns personally called both City Manager William Bridgeo and Mayor William Stokes to urge the city not to procure natural gas through a public bid process and, instead, to give the contract to Maine Natural Gas.
Langsdorf said later, after Maine Natural Gas withdrew its bid last year, “The next thing we heard was a phone call, in November, from CMP, saying ‘We don’t want to register our vehicles in Augusta anymore, for political reasons,’” Langsdorf said, citing a conversation between Ralph St. Pierre, assistant city manager and finance manager, and a CMP employee responsible for its vehcile fleet. “The next follow-up to that was this bill. CMP requested the bill be put in again. (Harvell) was so surprised he thought it was a joke.”
St. Pierre testified the bill would cost the city $200,000 in excise taxes from CMP, a big hit to Augusta, while providing comparatively little in new revenue for the other municipalities, each of which would get only a portion of that $200,000.
Augusta City Councilor Dale McCormick said the city would have to raise property taxes by 1 percent to make up for the lost revenue if the bill passes.
She said Augusta allows CMP to pay excise tax on all its vehicles with one check, a much easier and more efficient process than requiring the company to register its vehicles individually in other municipalities across the state.
John Carroll, a spokesman for Iberdrola, USA, has said CMP still would register 114 vehicles in Augusta if the law passes. While that would be a financial hit to Augusta, Carroll noted it would provide new revenue 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.
RoJean Tulk, director of government affairs at FairPoint Communications, said the company opposed the bill as presented but could support it with an amendment allowing utilities to choose whether to pay excise taxes where their headquarters are or where the vehicles are located. FairPoint’s Maine headquarters are in Portland, and the company pays that city about $270,000 annually to register 400 vehicles. She said paying one municipality is efficient and accurate, and having to register vehicles in the 12 other Maine communities where it has vehicles would “create a significant new administrative burden and cost, with those costs potentially being passed on to customers.”
A work session on the bill is scheduled for 1 p.m. Monday.
Keith Edwards — 621-5647 [email protected]