The General Services Administration this week said it will ask Congress to overrule a proposed increase in the District's utility taxes if the measure, advanced by Mayor Marion Barry, is passed by the City Council.
"The city just can't add on taxes without considering the impact on the federal government and we won't let them without a fight," said Richard O. Haase, commissioner of GSA's Public Buildings Service. "This is double taxation because the city already gets $336.6 million in a direct federal payment."
GSA's protest is being encouraged by officials of Potomac Electric Power Co., who have written the agency recommending such a step.
Mayor Barry has been pushing for higher utility taxes for several years and his current proposal is before the council. The new bill, like one introduced last year, would provide the District government with a net of $8.2 million in new revenues by eliminating a 6 percent utility sales tax while increasing from 6 percent to 11 percent the gross receipts tax on electricity and natural gas. The tax on telephone service would be set at 8.3 percent.
John L. Stanberry, assistant commissioner for GSA's office of public utilities, said that the agency's initial estimates--worked out with Pepco--showed the government could end up paying $10.6 million more for electricity alone.
"In addition, the increase in natural gas costs and telephone costs to the federal government will be $400,000 and $9.6 million respectively for a total of $20.6 million," Stanberry said in a background paper to top agency officials.
But city council aides said Stanberry's numbers ignore the fact that GSA already pays local utilities the 6 percent gross receipts tax already levied.
"They're inflating the figures a good bit," said one aide, who asked not to be identified.
"You're right," Haase admitted. "The numbers we have are all rolled up in a ball, and it's hard to break out what we are paying. But at least the increase will be $10 million. And that is still unacceptable."
The key factor is the change in the nature of the tax. The government is exempt from the utilities sales tax, but must pay the gross receipts tax. Shifting the city's tax entirely to gross receipts would thus subject the government to a much larger levy that it now must pay.
In a related issue, Stanberry said that a new accounting procedure that would require certain Pepco customers to pay their bills monthly instead of quarterly could cost the federal government another $8 million a year.
D.C. City Councilman John Wilson is already working to come up with an alternative that would raise the same amount of money without falling so heavily on the federal government. His plan, which is not yet a bill, would leave a sales tax on utilities and set a 6.7 percent gross receipts tax.
One of his aides said that the proposal will likely be offered as an alternative to Barry's bill, or as an amendment to it, when the issue is reviewed in March.
Stanberry estimates that the federal government would have to pay only about $700,000 in additional utility fees if Wilson's plan were adopted.
Wilson's aide said that in fiscal 1982 the city earned $26.5 million from the utilities sales tax and $63 million from the gross receipts tax on utilities.
Based on fiscal 1982 collections, revenues from the gross receipts tax would have to jump $34.7 million to offset abolition of the $26.5 million sales tax and provide the increase projected by Barry. GSA contends that it would have to pay about 30 percent of that increase although right now it pays only about 4 percent of these taxes.
But "even if it were an equitable amount, we would still be opposed to it," Haase said.
"GSA is opposed to any plan that would increase the costs to the federal govenrment," said GSA administrator Gerald P. Carmen. "In this case, as initially proposed, the financial impact on the federal government . . . is very substantial."
Haase, who will likely be called on to testify before Congress if Carmen presses his protest, said: "We've paid them once in the federal payment to the city and we shouldn't be subject to paying them again and again."
Pepco officials have apparently been pressing GSA to take just that stand. Alan G. Kirk II, senior vice president and general council to Pepco, wrote to Stanberry last week that he "would think that the administrator of GSA would want to be appraised of these local efforts and that he then would wish to energize the appropriate federal officials to resist these increases."
Pepco has told the City Council that it is aware of the city's financial difficulties, but some of the changes proposed--included a related plan to pass on the cost of streetlighting in the city to residents directly in their electric bill--are "impractical, inequitable, illegal and unconstitutional."
Stanberry said that the federal government would have to pay about $3 million if the streetlight plan were approved.
Under terms of the D.C. Home Rule Act, Congress reviews and can veto any new city law. In addition, Congress must approve the city's budget and can change it at will.