Saturday, August 31, 2013
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Council heats up over kilowatts and therms

Utility tax discussions -- Part 3

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[August 31, 2013]  On Tuesday, the discussions in City Hall council chambers regarding imposing a utility tax on Lincoln residents and businesses took some rather interesting turns throughout the evening.

There were in the gallery four people from the community who wanted to express their opinions about the tax. As they spoke, responses from the aldermen, both in favor of and against the tax, were passionate and sometimes slightly aggressive.

Wanda Lee Rohlfs was the first person from the community to speak. As she worked her way through her concerns, she mentioned that the aggregation process had lowered the cost of electricity, but those rates would change at the next round.

Mayor Keith Snyder broke into a conversation going on between Rohlfs and three of the aldermen at once and said that Chuck Conzo, the city treasurer, has stated that the rates will go up. Snyder said he didn't know how Conzo could be assured of that, since the city isn't set to do a new contract for another 12 months. He offered Conzo the opportunity to speak on the matter.

Conzo said that President Barack Obama has waged "war on fossil fuels." He said those were not his own words, but the words of the president. Conzo said the majority of the power plants today are coal-powered, but there is going to be a time when those plants have to shut down, and when they do, electricity will go up. He told the group that aggregation will still save people money, but nonetheless, the rates will go up.

Tom O'Donohue said that by Conzo's own logic, the rates could go down. He told the group that he personally has bought electricity for his building for the past six years, and every time he has made a purchase, the price has gone down.

"The trending I see is that it will go down," O'Donohue said. "Yes, eventually something that goes down goes up, but if you're going to make decisions according to what is going on in Washington, you're never going to make a decision."

Immediately following O'Donohue's statement, Snyder called the discussion to a halt and invited the next speaker to come to the seat. That was Richard Sink.

Sink said he was not in favor of the tax, but if the city was going to have to do it, he wanted to see the city get the biggest bang for the buck.

He told the council that if they enact the tax and borrow money for their projects, then approximately 24 percent of the annual budget of the city would be for repayment of loans. He also said that looking at an amortization of the loans, which would be created through the issuance of municipal bonds, the city would end up paying $8 million in interest on loans.

Sink wants the city to use the tax revenues to pay off the Illinois Environmental Protection Agency loan for past sewer reconstruction. Snyder said that even so, the $650,000 a year the city would have after the loan was paid would be available for use only in the sewer department. At that point David Wilmert commented that the city knows they have to redo the sewers.

Snyder asked Sink to justify the claim of 24 percent debt. Sink didn't have the numbers in front of him that he needed to support the claim, but he said the debt would come to $3 million a year and the annual budget is $12 million.

Snyder said the city had to maintain a certain debt-to-equity ratio and it is well below that rate.

Wilmert commented that in addition, many of the expenses the city has to address are going to be mandated expenses. He said the city did have some flexibility on the safety complex and downtown improvements.

Sink also commented that according to the rate structure of the electricity portion of the tax, the little guy would pay more, while others pay less. He said it looked like the more they use, the better rate they get. However, Snyder, Sue McLaughlin and Melody Anderson all chimed in to explain that everyone would pay the same rate for the first 2,000 kilowatt-hours.

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Sink countered, though, saying he was always going to be paying the higher rate while others got a break. He commented, "I know that figures don't lie, but liars do figure."

Shortly after that Snyder thanked Sink for attending and moved on to Don Bauer.

Bauer kept his statement very brief. He told the council that he was a retired citizen of the city, born and raised in the community. He said that as a retired person, it was getting harder and harder for him to live in the community.

He said that on a fixed income, he has had to cut back on all his spending, from fuel to food to medicine. He said, "You just keep taking and taking and taking."

Following Bauer's comments, there were no ensuing comments from the council. The mayor thanked him and moved on to the last guest, Jeff Short.

Short took the seat and began by saying that he was not opposed to the tax. But, he does have concerns about how the money will be spent.

He would like to see the money dedicated only to mandated expenses, specifically the sewer work and the pension plans. He also added the safety complex to the list of items he would support expending the tax for. He said he thought the downtown renovations were a good idea, but he saw them as a want and not a mandate.

O'Donohue reminded Short that the safety complex was not really a mandate, and he asked, as such, if Short was still in favor of it. Short said he was because he believes it is needed.

For the first time during this discussion, Marty Neitzel spoke up regarding the downtown renovations. She said that with the balloon festival just over, there had been thousands of people in the downtown area, and the sidewalks around the square were not in good repair and not safe. She feels that the downtown renovations are much more a need than a want.

"For us to revitalize, we have to make that downtown area safe," she said. "If we want people to come in and help our businesses that are here, we have to do that."

O'Donohue also noted that included in the downtown project is the replacement of sewers while the sidewalks are being torn up. He said that also made the project more of a need than a want.

Short said he wouldn't argue with that, but inside the project plan there are pieces that are not actually needed in order to make the downtown a safer and better place, and that is what he thinks the council should look at.


This concludes Part 3 of this series. In the fourth and final installment, LDN will provide detailed coverage of discussions that took place among the aldermen after all the guest speakers had offered their thoughts and opinions on the utility tax.


Previous articles in series

Council heats up over kilowatts and therms
Utility tax discussions


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