Marylanders won't have to pay sales tax on energy-efficient major appliances under a groundbreaking bill signed into law yesterday by Gov. Parris N. Glendening.
The new law, believed to be the broadest of its kind in the nation, provides incentives for consumers to buy products that use fuel-conserving technologies, including cars that run entirely or partly on electricity. It also provides for tax credits to companies that generate power using "clean" energy sources.
The legislation, hailed by supporters as a model for the nation, was one of more than 250 bills the governor signed at a State House ceremony yesterday.
Among them were bills banning most coin-operated cigarette vending machines, creating model building codes to encourage development of older urban areas and tightening regulation of nursing homes.
Environmentalists hailed the signing of the Maryland Clean Energy Incentive Act as a breakthrough that will encourage the development of fuel-conserving technologies. The incentives are similar to tax credits proposed by the Clinton administration, which have languished in Congress.
"This bill is a ray of sunshine, and we hope that the U.S. Congress will see the light before long," said Ed Osann, Maryland representative of the Natural Resources Defense Council.
House Speaker Casper R. Taylor Jr. said the signing makes Maryland the first state in the nation to adopt such a law, but probably not the last.
"We're getting one thing after another on the table as models for the nation to follow," the Allegany County Democrat said. The legislation, sponsored by Taylor and Sen. Christopher Van Hollen Jr., a Montgomery County Democrat, passed the Senate unanimously and the House with one dissent during the General Assembly session that ended last month.
The bill is not expected to have a large impact on state revenues because energy-efficient appliances and cars make up a small percentage of the sales of such items. Legislative budget analysts estimated the loss to the state treasury at $1 million to $2 million a year before the tax breaks expire in 2003 and 2004.
The law will suspend Maryland's 5 percent sales tax on some heavy appliances -- among the biggest home users of power -- beginning with energy-efficient clothes washers July 1. The tax break on room air conditioners will go into effect Jan. 1, and the waiver for refrigerators July 1, 2001.
The appliances will have to qualify under the federal government's Energy Star program, which designates products as energy efficient if they meet certain goals.
Joe Mitchell, general manager of Cummins Appliance in Pikesville, said Energy Star products account for 15 percent to 20 percent of the heavy appliances on the market. He said they generally cost about 10 percent more than the typical appliance.
Mitchell said the incentive is likely to appeal to some consumers, noting that it will mean a $60 break on the purchase of a $1,200 refrigerator. "That'll wind someone's clock somewhat, make them feel that they're getting something for nothing," he said.
Such customers will still be paying 5 percent more than they would for a typical appliance, but they'll be getting a product that's 35 percent more efficient. "That's a good deal," Mitchell said.
Osann said that spurring sales of energy-efficient appliances will lead to lower production costs and lower prices. "It's really focusing on advanced technologies and innovative practices that are right on the edge of the market," he said.
Among the technologies encouraged by the law are electric-powered vehicles or hybrids that use battery power to reduce the amount of gasoline they use.
For a fully electric vehicle, the bill provides a credit of up to $2,000 on the excise tax. Hybrid vehicles will receive tax breaks of $250 to $1,000, depending on how much gasoline they save.
Other provisions provide tax breaks on heat pumps, home air conditioning systems, water heaters and other equipment that meets energy-efficiency goals.
Energy producers could benefit from provisions that award tax credits for the use of renewable energy sources such as solar power, wind and agricultural waste. Among the technologies that would qualify are proposed plants that would generate power by burning chicken manure.
These are some of the more than 250 laws signed yesterday by the governor. Many go into effect July 1, others in October or January.
Jury duty: Jurors will be selected not just from lists of registered voters, but from all holders of state driver's licenses.
Smart codes: Creates model building codes to encourage rehabilitation and development in urban centers.
Wages: Requires "prevailing wage" be paid on most school construction projects.
Mass transit: Lowers percentage of transit system costs that must be covered by fares from 50 percent to 40 percent.
Nursing homes: Six bills set standards for nursing homes, increasing oversight, raising worker pay, requiring twice-yearly inspections and increasing penalties for violations.
Vending machines: Bans most coin-operated cigarette vending machines. Machines that accept tokens are permitted.
Commuter airlines: Authorizes subsidies to encourage commuter airlines to serve regional airports in Western Maryland, Southern Maryland and the Eastern Shore.
Planning: Upgrades Office of Planning to a cabinet department.