Archive for Monday, August 20, 2012

Lawrence city commissioners to consider ‘taxing’ city itself for utility service

August 20, 2012


It is not a decision city commissioners are asked to make everyday: Should the city tax itself?

Commissioners at their Tuesday evening meeting will consider approving a new policy that essentially calls for the city to begin charging its own water and sewer utility an amount roughly equal to what it would pay in city property taxes, if it were a private business.

“This is about trying to fairly distribute the costs of the service to our customers,” said Mayor Bob Schumm. “We feel like we need a policy so anybody could read it and understand what is going on here.”

Thus far, that hasn’t always been the case. The city has been making large dollar transfers out of the water/sewer fund, the solid waste fund, and the storm water fund for several decades. The rate dollars — in 2012, the total is expected to be about $3.6 million — are moved from the special accounts reserved for the city-owned utilities and moved into the city’s general operating fund, which pays for everything from police to parks and recreation.

The city auditor for the past several years has raised concerns the city doesn’t have a policy detailing for what purposes the transfers can be made. The proposed policy hasn’t alleviated all concerns.

“A lack of transparency is still our biggest concern,” said Bobbie Flory, executive director of the Lawrence Home Builders Association. The proposed policy spells out three reasons for a transfer of rate dollars into the city’s general fund:

• To compensate other city departments for the services it provides the utility. For example, the city’s legal department handles all legal issues for the water and sewer utility. The utility should compensate the legal department for its time and services, the new policy states. The city estimates there are at least a half-dozen departments that provide direct services to the water/sewer, solid waste and storm water utilities.

• To make a payment that represents a franchise fee to compensate the city for use of its right-of-way. Private utilities, such as gas, electric and telephone companies, pay the city a franchise fee to use the city’s rights-of-way to bury lines and infrastructure. City-owned utilities aren’t required to make a franchise fee payment, but city staff members argue they should because the city spends many dollars repairing street rights-of-ways damaged by broken water lines and such.

• To make a payment that represents the amount the city-owned utility would pay in city property taxes, if it were a private, for-profit utility. The policy notes the city-owned utilities indirectly benefit from police, fire, parks and recreation and other services that are funded through property taxes. State law, however, does not require a city-owned utility to pay any property taxes.

The payment-in-lieu of property taxes would treat the city-owned utilities more like private businesses, but only to a point. The city is not proposing to make a payment-in-lieu of property taxes to either the county or the school district, even though a private utility company would be required to pay those taxes.

The city’s water/sewer department also does not charge city departments, including large users like the golf course, for their water usage. The new policy would not change that.

City Manager David Corliss, however, said the new policy isn’t meant to treat the city utility departments exactly like private businesses. Instead, he said the new policy is meant to justify the amount of transfers from ratepayer funds to the general fund is appropriate.

“The city always has had this transfer,” Corliss said. “In the past, we haven’t always highlighted it well, but with a policy I think everybody will have an appropriate recognition of what is going on.”

The transfers long have been a part of the city’s budget, but the size of the transfers increased significantly during the first few years after Corliss took over as city manager in 2007. A 2008 city audit also found that Lawrence transferred a larger percentage of its rate dollars to its general fund than 16 other comparable university communities studied by the auditor.

In 2012, about 10 percent of the city’s water and sewer rate dollars are scheduled to be transferred to the general fund.

Corliss has pledged that he will not recommend an increase in the total amount of transfers for at least the next five years.

Opponents — who, in addition to the home builders, include the Lawrence Board of Realtors — argue the proposed policy is too broad and could allow the city to justify almost any size of transfer to help boost the city’s general operating fund.

“We want the city to work toward a way of figuring out what their true expenses are,” Flory said. “Right now, there is really no way to know that the amount of money being transferred is really being applied to the expenses they claim.”

City commissioners will consider the policy at their 6:35 p.m. meeting Tuesday at City Hall.


David Holroyd 5 years, 10 months ago

What is there to understand? The take money and spend it.

I would challenge the Journal World to get a gutsy reporter to go to City Hall and get a complete list of employees for the Water Department and their salaries. Next get the individual salaries of the Legal Department and their names and the actual number of hours devoted to particular issues. The public would be beyond shocked!

Where is Schumm when it comes to revealing the income from each parking lot downtown in the dollar amount of tickets issued and collected. Amout of revenue from each block where there are parking meters?

Next, reveal the amount spent on the upkeep of the lots. It's no secret that the lot behind the former Arensberg's store is going to crap. Is this the city "demoition by neglect" to turn the lot over to Fritzel?

Mr. Schumm, as a business person downtown you should be ashamed for the upkeep in that lot. For starters, trees need to be drasticaly trimmed, shrub heigh lowered. All dumpster areas thoroughly cleaned and the transformer areas as well. The metal awning cover needs to be repainted. Because none of this has been done makes the city suspect and I would be willing to bet that the "fix' is in to build on that lot.

The public could care less how the city moves money from one place to another, instead they do care about the good stewardship of monies received and thus far it is sloppy.

independent_rebel 5 years, 9 months ago

"I would challenge the Journal World to get a gutsy reporter to go to City Hall and get a complete list of employees for the Water Department and their salaries. Next get the individual salaries of the Legal Department and their names and the actual number of hours devoted to particular issues. The public would be beyond shocked!"

What does that have to do with anything? All you ever do is want to fire people and complain about the LJWorld. Based on your arguments life is better in Arizona in the present and was better in Lawrence 30 years ago, so, please, move to either place.

Bob Forer 5 years, 10 months ago

Lets wade through all the BS spewed by the city fathers and call this for what it is. Apparently, the city collects a lot more in fees for water and sewer than what it actually costs them to provide those services. That money is then transferred to cover shortfalls of revenue in other city departments. In other words, it appears that for years anybody with a water bill has been charged more than actual costs. The difference, of course, is a hidden tax which is used to fund other city endeavors. Were it not for this hidden tax, the city would be forced to raise the revenue from other sources, i.e., an increase in sales, property tax, and user fees (or, the unthinkable for many city bureaucrats--reigning in the expenditures of those other departments)

Instead of fessing up and acknowledging that they were caught with their pants down charging water customers a hidden tax, they have the audacity to "fix it" all with what appears to be voodoo accounting methods.

A tax is a tax is a tax. And we as citizens have a right to know how much we are being taxed. The city should either specify and itemize the excess they collect on water bills as a special excise tax to fund other city department, or raise the sales tax and/or property tax, or simply reign in spending.

Attempting to hide a tax with suspect, nonsensical accounting methods is insulting, and unadulteated BS. As a taxpayer this pisses me off tremendously.

Currahee 5 years, 10 months ago

Tax the city itself so it can raise more in sales taxes to cover the cost of taxing itself? Have we gone full blown stupid?

pizzapete 5 years, 10 months ago

This is brilliant, if I'm ever accused of embezzlement from my employer, I'm going to tell him I was paying myself a "special tax" with that extra money, so it's technically not stealing. I guess we shouldn't be surprised that the city has been charging us all extra for our water and sewer needs and using the money to fund other projects not directly related to the repair, maintenance, and future needs of the sewer and water department. This new revelation by our city commission and all the recent "special" retail tax districts and "special" 20 year property tax give aways make my head spin. And these are the same guys that are trying to sell us a new library, police building, and sports complex? I think the city commission needs to figure out how to pay for what we already have before we add more expenses to the city's budget and have to find ever more creative ways to tax our fellow citizens.

TruthSayer 5 years, 10 months ago

Alright, Mr. Lawhorn, now keep the investigative ball rolling. Last week, while commenting on the proposed sports complex, out west, I challenged the local media to grow a pair and start doing this kind of research. Now, can you follow up and get to the "cruxt of the biscuit"? This is starting to look like an elaborate financial "shell game", where making it hard to track the money is the objective. Does the Attorney General's office need to get involved by bringing in auditors to review the books? I have the feeling, that at the bottom of this, there will be a big steaming pile of scandal that rocks this community and sheds light upon the unscrupulous behavior of past and present city officials. At least, as long as the powers that be don't pressure your editor into burying the story. Hopefully, the spirit of Woodward and Bernstein is still alive in reporting.

TruthSayer 5 years, 10 months ago

Good point oneeye_wilbur, but, I am talking about an Attorney General's office appointed auditor, not a city of Lawrence crony!

Lawrenceks 5 years, 10 months ago

I guess that is one way to raise taxes. Althoguh pretty stupid. Lets find out who is pushing for this one and get rid of them NOW!

John Hamm 5 years, 10 months ago

Absurd! So the citizens of this great town get a double whammy - pay for the service then pay a little more to cover the "taxes" a private individual or company would pay on the cost of the service! Anything to take a little more money from the pockets of the working and put it into the hands of the Uber-Liberals wasting it daily. SMH laughing at their idiocy!

gccs14r 5 years, 10 months ago

The "excess" should have been going into a reserve fund for infrastructure maintenance and upgrades. Would the water department now have enough in reserve to pay cash for the "necessary" additional sewer plant had the transfers not occurred? Or maybe the reserve funds could have been used to purchase the landfill when it came up for sale (IIRC, the comment was, "We thought about it, but didn't have the money for it.") so we wouldn't have to pay tipping fees any more. Or we could fix the broken water intake at the Kaw plant. Or we could install a gak filter at the Clinton Lake plant to get rid of the dead algae taste in the water every summer. Instead, who knows where the money went?

Carol Bowen 5 years, 10 months ago

Wilbur, we need to do more than worry about salaries. Let's investigate the purpose of each fee. Storm water fees, for example are supposed to improve flooded areas. there was quite a debate over that fee. If this money is getting skimmed off, we are not getting what we paid for.

Every so often, the city decides to raise the fees on the water bill. Water departments usually make money. I wondered why our water department was having trouble. I agree with gcss!

How different from Parks and Rec. it has an unstopable stream of money and still ignores basic maintenance like the downtown parking lots and neighborhood parks.

Scott,Tell us more. We want to know.

Carol Bowen 5 years, 10 months ago

Hmmm. Does this sound like the raids on the postal workers pension fund and the Social Security trust funds only at a local level?

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