Md. lawmakers support keeping tax credits for coal producers

ANNAPOLIS — Gov. Martin O'Malley is forging ahead with his green-energy initiative while trying to end tax incentives for the state’s coal industry, but he is facing stiff opposition from lawmakers who say eliminating the credits could drive up energy prices and cost some Marylanders their jobs.

Mr. O'Malley, a Democrat, has proposed in his budget that the state get rid of the Maryland-mined coal tax credit, which gives as much as $6 million a year to in-state energy providers that purchase coal mined in Western Maryland.

The credit, which pays utilities $3 for every ton of coal they purchase, was designed to give Maryland miners an advantage over those in neighboring states and is scheduled to expire in 2021.

The governor has sought for several years to eliminate the credit, which he says is unnecessary and costly to the state, but many lawmakers appear content to keep it in place.

“We have kind of felt that we had agreement and that maybe we ought to stick with that,” said Delegate Norman H. Conway, Wicomico Democrat. “I don’t know what the feelings are at this point, but I’m not sure that there’s been a lot of change.”

Maryland’s coal-mining industry is entirely within Western Maryland, where local officials say it employs hundreds of residents and is an integral part of the economy.

In 2006, the General Assembly passed a law to cap annual coal credits at $6 million and phase out the credit, dropping its maximum value to $3 million a year in 2015 and eliminate the credit entirely in 2021.

Delegate Wendell R. Beitzel, Garrett Republican, said eliminating the credit would hurt a coal industry that provides a relatively cheap energy source while struggling to keep up with the abundant and often cheaper alternative of natural gas.

He argues that the governor —- who often touts the state’s goal of getting 20 percent of its energy from renewable sources by 2020 - is trying to force out traditional power sources in favor of greener technologies, including offshore wind energy, that are more expensive and experimental.

“The energy costs are so cheap, it makes it tougher to promote alternative energy that people have to subsidize in their electric bills,” Mr. Beitzel said. “I really think there is an underlying current to either do away with these forms of energy or make them more costly.”

The Democrat-controlled Assembly has been largely receptive to Mr. Beitzel’s argument, overruling several efforts from the governor to keep the tax credit out of past budgets.

Mr. Conway, chairman of the powerful House Appropriations Committee that helps shape the governor’s proposed budget into an approved state spending plan, said lawmakers are in no hurry to do away with the credit.

While Mr. O'Malley’s proposal to eliminate the credit has earned some scorn, he has received backing from green-energy enthusiasts and some more unlikely supporters.

Delegate Herbert H. McMillan, Anne Arundel Republican, is sponsoring a bill this year to get rid of the credit, which he calls “corporate welfare” for a coal-mining industry that he says already is raking in millions from in and out of state and needs little government assistance.

“The notion that we need to prop up the coal industry with a subsidy is absurd,” he said. “Whether you’re a Democrat or a Republican, this is money we could spend on something else.”

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