Newberry funded unfairly by utility customers, some say

NEWBERRY – Adopting a city budget often creates political tension as elected leaders aim to shore up funding for some departments and projects while cutting others.  This year in Newberry, that debate appears to center on how the tax burden should be distributed. 

At issue seems to be a concern by some that the City of Newberry’s electric utility customers are shouldering disproportionately more of the cost of the City’s expenditures than other property owners.

Commissioner Alena Lawson, however, says ultimately everyone pays in, even if they aren’t a City of Newberry electric customer and therefore, the way the City is funded is indeed fair.

Mayor Bill Conrad adamantly disagrees with Lawson’s assessment, noting that property tax is paid by all property owners and goes into the general fund to benefit all residents. Utility payments, on the other hand, go into a special account designated for the upkeep of the City’s utilities.

The point of contention for Conrad comes as the City transfers money from the utility fund into the City’s general fund to pay for services, much of which he says is unrelated to the delivery of the utility services.  With only about half of Newberry’s population connected into the City-owned electric utility, Conrad argues that not everyone is fairly contributing to the operation of the City.

What’s more, Conrad says, is that the more money transferred from the utility, the higher the rates paid by the City’s utility customers.  In 2008, the City transferred $900,000 out of utilities and into its general fund.  Annual transfers like that create higher rates for utility customers, Conrad argues, pointing out that in that year, the City-owned electric rates were 17 cents a kilowatt hour as compared to just 11 cents per kilowatt hour for an electric utility cooperative that also operates within the city limits of Newberry.

In Conrad’s view, the bottom line is that customers of the City-owned utility are strapped with higher financial burden to run the City than others whose contribution to fund the City comes only in the form of property taxes.

“The people who really get hurt by this are the low-income people who live in houses that aren’t well insulated. They burn a lot of electricity. They pay $500 to $600 a month in utility bills, and they should be paying a third less than that,” said Conrad.

He believes that if residents understood how the utilities contribute to the general fund, they would be clamoring to City Hall asking why they have to support the City.

Making matters worse, Conrad says, is that elected officials aim to keep property taxes low, all the while increasing City spending.  That increased spending ultimately has to be paid for by someone, and Conrad contends that it’s usually the City’s utility customer who is left holding the bag.

The half of property owners who don’t buy their utilities from the City are getting a free ride, he said, adding “There are a lot of people who think that is wrong, and I’m one of them.” Conrad is fine with a limited transfer from utilities into the City’s general fund.  He calls for around five percent as a reasonable number, but as to the 14 percent transfer anticipated in the coming fiscal year, he simply says, “I think that’s ridiculous.”

“Most people don’t know what’s going on. Most of the rate-payers don’t know they are getting hosed,” Conrad said.

Chemist Jim Stainfield does know what’s going on with the utility funds. “City utility rate payers are paying higher utilities and don’t understand where the funds are going. And what I find really offensive is, at this last budget meeting… [commissioners] added $150,000 worth of spending, which means they will have to take more out of the utility [fund] to cover it. It’s stupid.”

“Our millage rate would be much, much higher if the City was pulling from tax funds for all the budgetary needs, but the utility fund has been treated like a reserve to balance them out,” Stainfield said.

And because Florida utility providers may only supply service within a specified geographic region, customers on the City-owned utility don’t have the option of switching to the lower-cost cooperative, he said.  In Stainfield’s view, if the burden of the budget were properly distributed, there would be a higher, equal millage rate across the board.

Although Stainfield and Conrad share similar views on the use of utility fund transfers, not everyone agrees.  Commissioner Alena Lawson, in fact, says, “We have been very prudent in how we manage the taxpayers’ money.”

And Lawson said customers of the City-owned electric utility are not up in arms about transfers, adding that the profits of the utilities are being used to conduct the business of the City.

“I don’t have a problem with the transfer,” Lawson said. She doesn’t see the difference between paying a utility rate that go towards the entire City’s upkeep and paying taxes for unused services. She pays taxes for schools her now-grown children don’t attend. “That’s how you make things work.”

Moreover, Lawson notes that while customers of the electric co-operative don’t pay into the City’s electric fund, they do indeed pay into the City’s general fund by way of franchise fees and taxes collected and paid by their service provider. 

Lawson said she doesn’t agree with the argument that only customers of the City-owned utility are funding the City’s operation because, no matter who the utility provider is, funds from those utility bills ultimately make it into the City’s coffers.

To make her case, Lawson points out that the fire department has an unsustainable budget without a transfer of utility revenue to the City’s general fund. Some do want to get rid of the transfer that ultimately supports the fire department, she says, adding that in this case, a majority “doesn’t mind” taking the funds from the utility fund for a service it cherishes.

“We have certain standards in the City of Newberry,” Lawson said. “It relates to our response: our response is to the needs and the requests of the citizens. They expect that.”

After the string of hurricanes seven years ago, “the utility department responded admirably,” she said. “The citizens were telling us, ‘We love our utility department.’”

The millage rate – the amount per $1,000 that is used to calculate taxes on properties – has been rolled back from 3.85 to 3.8084.  “We have been good stewards,” Lawson said, “And I am proud of what we’ve accomplished in Newberry.”

Others, like Conrad and Stainfield, say that property tax reduction was only possible because of transfers from the City-owned electric utility.

#     #     #

Email cgrinstead@

alachuatoday.com