STEALTH TAXES IN UTILITY BILLS
The title for this piece comes from a recent Provo Daily Herald editorial because it so aptly summarizes what we have been saying about Bountifulís multi-million dollar transfer from the electric fund to the general fund.
During this yearís city budget hearing, according to those present, Bountiful officials acknowledged that city residents are being overcharged on power rates in order to supplement the cityís general fund by millions of dollars.
Rather than raising power rates by 6% on July 1, the Mayor and City Council could have kept the rates unchanged had they just reduced the amount of the transfer to the general fund. But no, they elected to raise power rates to a level roughly equal to or even a little higher than those charged by Utah Power and Light in order to maintain the subsidy.
Of course, if they had elected to give power users a break, the Mayor and City Council would either have had to reduce general fund expenditures or increase property taxes. Neither of these alternatives caught the fancy of the city fathers.
Cutting expenditures would have meant reducing spending for nice-to-have programs that are not part of governmentís core functions and like politicians everywhere, city officials enjoy spending other peopleís money to make themselves popular with their supporters.
On the other hand, raising property taxes to pay for these nice-to-haves was apparently not an appealing option either since a truth-in-taxation hearing would have had to been held. That would likely have upset many more people than a 6% power increase passed by the City Council and hidden under the guise of increasing power costs.
So, utility rates went up, spending continued unabated, and taxes remained stable because as the Daily Herald astutely noted:
Raising a municipal utility rate is simpler than raising property taxes. Why? Because residents will scrutinize a tax hike and make government justify it.
To raise property taxes, cities must complete the truth in taxation process, which is required by law and involves conducting public hearings to explain the reasons for the increase and to accept comment from both sides.
By contrast, utility rates can be set at a council meeting.
Using a utility fee to pay for other city services is a way of picking taxpayers' pockets without their knowledge. It hides the true cost of city government from the people. It keeps tax rates artificially low and gives the appearance that the city is being fiscally responsible.
So, what can be done about the current system which had led to one power increase after another?
How about joining us, CitizensForTaxFairness.org, in supporting State Representative Aaron Tiltonís bill that will require cities to disclose more detailed information about these transfers?
And, how about asking the legislature to look into this practice of overcharging utility rates in order to fund other government programs?