NEWS RELEASE – HUNTSVILLE UTILITIES
Opposition to Governor Bentley’s “Revenue Solution” to tax Huntsville Utilities and other state municipal utility corporations at 2.2% with a municipal utilities business license tax
Thursday, March 26, 2015 – 1:00PM
Huntsville Utilities strongly opposes Governor Robert Bentley’s “Revenue Solution” to tax municipal utility corporations with a municipal utilities business license tax at 2.2% based on yearly gross receipts. From his state announcement on Friday, February 27, 2015, to address the estimated $700 million dollar gap in the Alabama General Fund budget, Governor Bentley proposed a list of tax increases to support the budget shortfall. Creating a new tax for municipal utilities is not fair for Huntsville nor equitable for the citizens served by Huntsville Utilities.
Governor Bentley spoke in Huntsville this morning at the Huntsville/Madison County Chamber of Commerce as he travels the state this week to gain support for his tax proposal. While Huntsville Utilities supports our local economic development and the leadership of all our elected officials, supporting this tax would place an unnecessary utility bill increase on all Huntsville Utilities’ customers.
Presented in the Alabama House of Representatives by Representative Chris England of Tuscaloosa, House Bill 276 for the 2015 session, seeks to repeal the current exemption of municipal utility corporations like Huntsville Utilities from the municipal utilities business license tax. Adding municipal utility corporations would subject Huntsville Utilities to the 2.2% tax requirement for electric, natural gas, and water customers. “As a strictly rate-funded utility, Huntsville Utilities places no tax burden on the citizens of Madison County or the State of Alabama. Huntsville Utilities receives no government funding. Therefore, under our not-for-profit publicly-owned model, this municipal utilities business license tax would increase our cost to provide reliable utility services to our approximately 177,000 customers,” says Jay C. Stowe, President & CEO of Huntsville Utilities. It would be unfair to tax municipal utilities as investor-owned utilities are taxed.
Huntsville Utilities is an extension of the City of Huntsville government, as such, this tax proposal represents Government taxing Government. Municipal Utilities (electric, natural gas and water) like Huntsville are exempt by virtue of the “natural immunity” of municipalities from state taxes. Taxing municipal wastewater, water, electric, and natural gas systems is not fair to the municipalities served as this would be a new tax, and does not add value to the infrastructure that provides these life essential services. This tax, if enacted as proposed, would be detrimental to the Huntsville/Madison County economy as it will affect everyone. The Alabama Legislature will place a significant financial hardship on the elderly and poor on fixed incomes if this becomes law – this is not fair. Additionally, House Bill 276 does not remove the tax exemption from some our local public charities and social service entities, mostly our United Way partners, but requires the municipal utility corporation to pay the 2.2% license tax for these entities. As a not-for-profit utility, Huntsville Utilities would be forced to pass this on to all our customers in the form of availability charge increases, rate increases, and fee charges to pay this tax to the State of Alabama. These increases would not be fair to our customers, but would be required if this proposal becomes law.
Huntsville Utilities does not want to increase utility bills for our customers to pay for the budget shortfall in Montgomery. Governor Bentley and the Alabama Legislature must know that it is not acceptable nor fair to impose this municipal utilities business license tax to municipal utilities. Huntsville Utilities strongly encourages the opposition to House Bill 276 and any effort to eliminate the municipal utilities business license tax exemption for municipal utility corporations.
Huntsville Utilities is a publicly-owned, not-for-profit utility serving approximately 177,000 electric, 50,000 natural gas, and 91,000 water customers in Huntsville and Madison County, Alabama.