Vero Council ignores high electric bills
As public anger mounts over sky-high electric bills, the Vero Beach City Council – while reviewing the electric utility’s budget requests for 2009-2010 at a meeting last week – passed up the opportunity to even talk about possible ways of lowering this summer’s record bills which are having a crippling impact on residents and businesses alike.
One of the items many expected to draw discussion was the way the City of Vero Beach each year skims $5.9 million off the top of electric bills – more than half of it out of the pockets of non-city residents who get their electricity from Vero Beach — and uses this money from electric rates to subsidize other city expenses, enabling City Council members to proudly boast of holding down Vero Beach property taxes.
“We’ve had this conversation over the last year, and obviously a lot of conversation in public is about what’s fair,” Vero Beach City Manager Jim Gabbard told the five council members. “I think over the course of at least the history that I am aware of with the electric system, there’s been a reliance on the transfer to offset tax rates. And we’ve continued to drop our tax rate. We’ve … received lots of acclaim and so forth from the public for doing that.
“But is that fair to the people outside the city?” Gabbard asked. “The whole discussion is about that. This is one of those things that is really philosophy, and it’s the direction of the Council.”
Gabbard said he believed “some measured increase in taxes with a corresponding decrease in the transfer” might be worth consideration, but Vice Mayor Tom White would have none of it.
“The purpose of owning the electric company was to relieve some of the tax base of Vero Beach residents,” White said. “They only pay $1.93 millage right now and if they did not have money coming in from (electric and other) enterprise funds, it would be $4, $5 or $6. You are going to pay it one way or the other.”
“That’s exactly the point,” echoed Council Member Bill Fish. “Whether you pay it through the electric rate or through ad valorem taxes. You could actually raise the ad valorem taxes and reduce (the electric rate) – one way or another.”
But that, of course, isn’t “exactly the point.” The point is that by diverting electric funds to the Vero Beach general fund, the City Council has found a way to get the 61 percent of Vero Beach utility customers who do not live in the city – many of whom live on the barrier island — to subsidize artificially low property taxes for Vero Beach city residents.
While White and others contend that eliminating the electricity subsidy would force a big property tax increase, what it might more likely force is a far more serious look than the City Council took last week at meaningful cuts in the city budget.
Mayor Sabe Abell and council member Kevin Sawnick did not utter one word at last week’s hearing about this summer’s soaring electric rates, or the possibility of milking less from electric bills to subsidize the city’s general fund.
Only two City Council members, Fish and Debra Fromang, seemed even slightly interested in possibly reducing transfers from the electric fund to the general fund – and their interest seemed to lie not in lowering electric bills, or in fairness to non-city residents, but in seeing the money used for capital improvements to the electric system.
The city for years has been financing electrical system projects with debt, which currently stands at $58 million, and is proposing to borrow another $6.5 million in the coming year to pay for electric system capital requirements.
“Is there ever a discussion about not transferring as much to the General Fund, and using some of the revenues (for capital projects that are) necessary?” Fromang inquired.
“This is a fundamental question we really ought to look at,” agreed Fish. “Do we want to not send money to the general fund, and convert it over for major capital projects? I think we should discuss that as a general strategy. If we had a real surprise at the electric plant, we would have to borrow money to take care of it.”
“We can probably spend a lot of time kicking that around,” Gabbard said. “I think probably, this is something again that we should really take seriously. But we really need to set aside some time . . . at some point in the next two or three months . . . . This might be a valuable discussion and we could talk about a lot of things.”
And that was pretty much the end of the City Council discussion of electric rates and the use of the electric system as the city’s cash cow.
There was never any mention of the possibility of the City of Vero Beach foregoing some of the $5.9 million it is milking this year from electric rates, and using that to at least slightly lower the electric bills of hard-hit homeowners and businesses.
“There’s your City Council in action,” said one disappointed observer. And since the Council has no meetings scheduled for August, no relief for the beleaguered residents served by Vero Beach electric appears in the offing.