Friday, December 31, 2010

The Markley Suit And Fake Taxes

The legal ball that state Senator-elect Joe Markley tossed into the Superior Court has been batted by Judge Henry Cohen back to the Department of Public Utilities Control (DPUC).

Mr. Markley, striking a blow for Connecticut citizens and good government, filed a suit in October against the DPUC for having permitted a fee to appear on energy bills that anyone with half a brain would recognize as a disguised tax.

In 2000, the state legislature initiated energy deregulation in Connecticut. Having made inquiries of the state’s two largest energy distributors concerning the cost of deregulation, legislators were told the bill would run about $1.7 billion. Rather than raise the money for deregulation though a forthright tax, it was decided to pay for deregulation through bonding. The bonds used to pay the cost were securitized by the imposition of a fee on electric bills amounting to about $15 per month. The Competitive Transition Assessment (CTA), which has been appearing on electric bills for a few years, was set to expire in 2011 for one company and 2013 for another.

Through a combination of impudence and imprudence, Connecticut in the meanwhile had accumulated a budget deficit of some $3.5 billion in each of the next two years and beyond. The governor and the legislature, lacking the courage to raise taxes before an upcoming election, as usual stuffed the 2011 budget hole with temporary and dubious fixes, one of which is a brand new tax to be applied as a fee on energy bills. This one -- a so called “fee” with lipstick on it designed to look like Marylyn Monroe, though it is an obvious tax pig – the legislature, with a bow to George Orwell, called the Economic Transition Charge (ETC). Having received no political push back the first time when the legislature secreted a tax in the form of a “fee” in energy bills, a repeat was in order.

Who says you can’t fool all the people all the time?

When Mr. Markey noticed the imposture, he filed a suit contesting the imposition on two grounds: The DPUC, he argued, lacked the authority to implement the tax; and the tax was also inequitable because ratepayers in several districts would not be required to pay it. Judge Cohen recently decided that Mr. Markley had not exhausted all the administrative remedies available to him before filing suit and, while making no decision on the merits of the case, ruled that Mr. Marley should exhaust himself by first seeking a remedy from the DPUC, which is on the order of seeking a missing chicken from the full bellied, satiated and smiling fox in the henhouse. In oral argument, Mr. Markley characterized this route as “a matter of theatre,” showing that there is room in legal pleadings for searing poetry.

To people unused to artful legal subtleties, it may seem obvious that the legislature, suffering from a lack of courage, delegated the DPUC to implement a tax used to securitize bonds the proceeds from which would be dumped into the state’s depleted general fund. Assessments collected from citizens and transferred to the general fund to pay off debts incurred by legislatures are taxes, though these collections have cleverly been styled as “fees” to dupe citizens the legislature has tapped out with taxes.

Perhaps in Utopia one might expect from judges clear, courageous and constitutional rulings. But Connecticut is very far from Utopia. The usual outcome in cases involving taxes is to allow the taxing authority as much liberty as needed to fill state coffers; the whole governmental apparatus, judges being a principle part of the Republic’s tri-partite structure, feeds at the same public trough. Empty bellies and possible joblessness within the public sector are powerful inducements, sometimes more persuasive than measures that truly advance the public good.

According to a luminous story in the Ridgefield Press written by Carrie Schmelkin and Macklin Reid, Mr. Markley, not at all intimidated, has said he intends to press on with his suit. State Senator Toni Boucher and state Rep John Frey, both representing Ridgefield, have placed themselves on the side of the angels and overtaxed citizens. They are certain to be joined by other conscientious legislators courageous enough to confront chicanery and call it by its right name.

The case made by Mr. Markley against this odious hidden tax -- paid by everyone, by the way, including the 80 year old mothers of editorial writers who have not yet muckraked this obvious imposture -- should not be permitted to whither on the judicial vine, even if the courts should decide in favor of legislative duplicity. Preeminently, this subterfuge is a political matter and should be resolved at the voting booth by those people in Connecticut -- Republican, Democratic and Independents -- who refuse to allow themselves to be fooled all the time.

At the very least, these controversial and inappropriate “fees” should figure prominently in upcoming campaigns for legislative seats opened when Governor-elect Malloy reached into the legislature to fill important positions in an administration that he has promised countless times would be forthright, transparent and honest.


Anonymous said...

The judges in ct are as corrupt as the political hacks that appoint them.

David said...

Your local pol knows that rather than let prices decrease, he will fill the gap with taxes. Et Voila, the local utility can be blamed for persistent high electric prices and a revenue pipe from the consumer to the unions can be established.

CT should have a competitive power rate after the deregulation adjustments expire. Plants are relatively new, efficient. The nukes are paid off and natural gas prices are low.

Don Pesci said...


That’s right. Part of the deregulation deal was that CL&P would no longer be an energy producer, merely a distributor. And deregulation implies, does it not, a reduction in regulations? With a few nuclear plants, Connecticut could become energy independent, like France. Natural gas is fine also. But Connecticut is fixated on lowering energy prices through conservation alone; i.e. by reducing demand, and high prices are a way to reduce demand and encourage conservation. The best way to lower energy costs is to increase supply through real deregulation: When the product increases, prices go down. We should be trying to make Connecticut, relatively a small state, energy independent. The Blumenthal way – lower your prices or I’ll sue – is a spectacular failure.

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