Thursday, August 29, 2013
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Council heats up over kilowatts and therms

Utility tax discussions -- Part 1

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[August 29, 2013]  On Tuesday evening, members of the Lincoln City Council once again discussed the issue of whether or not to impose a utility tax on consumers in the city.

Of the eight city aldermen, three have been very vocal on their opinions about the tax. Melody Anderson and Tom O'Donohue are clearly in favor of the tax, while David Wilmert is clearly opposed to it. Bruce Carmitchel appears to still be undecided, though possibly leaning toward opposition. The balance of the council -- Jeff Hoinacki, Kathy Horn, Marty Neitzel and Jonie Tibbs -- have not spoken out a great deal in council chambers.

The issue was scheduled to be voted upon last week, but Mayor Keith Snyder informed the council that there was an issue in how he and city administrator Sue McLaughlin had explained the application of the tax. This was due to a miscommunication between the city and Ameren Illinois, wherein Ameren had given the city the formula used for a home rule municipality, while the city of Lincoln is actually a non-home rule municipality.

This week, Snyder and McLaughlin provided new information about how the tax will be applied to natural gas as well as electricity.

When looking at a typical residential utility bill, the top half of Page 2 will show the natural gas usage for the month. On the left-hand side of the bill, the following definitions of charges are shown:

Customer charge
Delivery Charge Gas
Rider GER charge
Total Delivery Service Amount

Gas Supply
Gas charge (PGA)
Total Supply amount

Below this will also be a section with a heading of TAXES.

The 4 percent charge on natural gas will be applied to the dollar figure that is listed as "Total Supply amount."

Using an actual bill from a midwinter month in Lincoln as an example:

For a home with gas heat that was charged $62.17 as the Total Supply amount, when the 4 percent tax is applied, it would be $2.4868, or almost $2.50 added.

On the electric side of the tax, the formula is a bit more complicated. For a residence that uses less than 2,000 kilowatt-hours per month, the 4 percent tax would be calculated using a multiplier of 0.00488 per kilowatt.

If the home exceeds 2,000 kwh per month, the kilowatts over the first 2,000 will be calculated using a multiplier of 0.00320 per kilowatt.

Using the same bill as an example, at the very top of Page 2 is a table showing the total kilowatts used in a billing period. On this particular bill, the total comes to 607 kilowatts. Calculating the tax would then mean multiplying the 607 by 0.00488, which would equal $2.96212, almost $3.

This would bring the total tax charged on both gas and electricity for the month to $5.45, rounded to the nearest penny. Therefore, had the tax been applied at that time, this bill that in January of 2013 totaled $147.24 would have totaled $152.69.

[to top of second column]

If a bill were to indicate the consumer used 3,500 kilowatts in a billing period, then the first 2,000 would be calculated at 0.00488 and would equal $9.76. The additional 1,500 would be calculated at 0.00320 and would come to $4.80. Consequently, the tax on electricity only on that bill would total $14.56.

At a rate of 4 percent, the city is anticipating they will collect $983,300 per year.

During the course of discussion on Tuesday night, McLaughlin said that one thing everyone needed to remember is that it will not be city residents who provide the lion's share of this total. The biggest part of the tax revenue will come from local business and industry, as they are the larger consumers who will on a regular basis exceed the 2,000 kwh per month.

As actual discussion on the topic began, Snyder reminded the council that he had placed copies of letters of endorsement for the tax on their desks.

There were two letters from union representatives for the city fire and police departments.

Lincoln firefighter Jason Van Winkle signed the fire department letter as the Lincoln Fire Local 3092 president. The letter states that the union has reviewed the proposal of a utility tax in the plan titled "Rebuilding our foundation" and "wholeheartedly agree" with the plan for securing pension obligations. Regarding the proposal of a new fire department building, police station and infrastructure improvements, the letter said the union finds those "agreeable as well."

Officer Matthew Vlahovich of the Lincoln Police Department signed the police letter as the president of Fraternal Order of Police Lodge 208. The first paragraph of the letter was identical to that of the fire department, but Vlahovich had added additional information saying the members of the FOP have been urging city officials for several years to secure the pensions, improve infrastructure and find a place for both the police and fire departments to "function efficiently."

There were four people in the gallery who wanted to address the council regarding this tax. Snyder called on them in the order in which they had filled out their requests to speak.

Those who spoke were Wanda Lee Rohlfs, Richard Sinks, Don Bauer and Jeff Short. LDN will provide complete coverage of those discussions, beginning with the exchanges between Rohlfs, the aldermen and Snyder, in the next segment of this series.


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