HomeLocal governmentCity commission votes to reduce the general fund transfer, raise electric and wastewater rates through 2027
City commission votes to reduce the general fund transfer, raise electric and wastewater rates through 2027
July 22, 2021
BY JENNIFER CABRERA
At the July 19 Gainesville City Commission meeting, the commission took up two resolutions regarding budgetary plans for upcoming years.
$2 million per year General Fund Transfer reduction through 2027
They first took up a resolution to decrease the amount of the General Fund Transfer (GFT) from Gainesville Regional Utilities (GRU) to the General Government fund (GG) by $2 million each year from fiscal year 2022 through fiscal year 2027.
Commissioner Gail Johnson immediately asked whether staff had followed up on her previous request to research some assistance programs for residents who would have difficulty paying their utility bills with the proposed GRU rate increases. It turned out that nobody had worked on that because GRU staff had assumed the commission was referring to GG staff and vice versa. However, GRU General Manager Ed Bielarski said that GRU cannot legally make an income-based assistance program, so such a program would have to come from the GG side. Mayor Lauren Poe said he had assumed they would use American Rescue Plan (ARP) funds for that, so he was expecting that discussion when the commission looks at how to spend the ARP funds. Johnson said she was “very clear that I was not going to be voting in favor of an increase until those programs came back to us.” City Manager Lee Feldman also said he was not aware of a mechanism that GG could use to subsidize accounts.
Commissioner Adrian Hayes-Santos asked about the effect of the GFT reduction on the general fund its ability to issue bonds. Feldman said there is a negative revenue impact on the general fund that increases every year – from $2 million the first year, to $4 million, $6 million, up to $12 million per year, for a cumulative total of $42 million over six years. He said it would reduce their bonding capability by about $85 million and that they anticipate a negative outlook, if not a downgrade, in the general government’s credit rating. Hayes-Santos said he had “serious concerns for us trading one problem for another… I don’t know how we keep this up, especially if this is for six years. I think we can do a shorter period. I would support a three-year period.”
Commissioner David Arreola supported the resolution because “we are stepping down from [the current GFT level] rather than jumping off of the cliff… This is for the health of the overall organization, both sides of the house… It’s a difficult choice, but a lot of healthy choices are difficult ones.” He moved to adopt the resolution, and Commissioner Harvey Ward seconded the motion.
Commissioner Desmon Duncan-Walker said it felt “disingenuous and disrespectful, quite frankly,” to move past Johnson’s objections. “I’m hoping that when those types of directions are given… that staff doesn’t just blow off what the commission directs them to do.”
Feldman repeated what he had said earlier about not thinking the direction was for him, and he said that he didn’t take full responsibility because they had several weeks’ notice that this item was coming up, and no commissioner called him to say the information was missing. Johnson tried to move to continue the item to a future meeting, but Poe said there was already a motion on the floor. Poe suggested that commissioners be more explicit in the future in stating which charter officer is responsible for responding to requests.
Commissioner Reina Saco said they “may have overcorrected” in their desire to remedy the GRU downgrade situation, but she didn’t think it had been clearly communicated that general government could also be downgraded. “You don’t want to trade one problem for another.” She said she preferred a 3-year plan.
Commissioner Harvey Ward said he supported the plan, knowing that any future commission could change it.
Arreola added to the motion a direction to GG staff to return with a utility assistance program and for GRU “to participate in the framework of that.”
Johnson said she appreciated that, but she had been told “multiple times” that she didn’t need to be specific about which staff should respond to their direction because she was told to “just say ‘staff’ and they will figure it out… This is me practicing an incredible amount of restraint right now because it is not lost on me… how often I am the one that makes motions that never get followed up on, or they do it differently, or somehow it gets twisted, or something just doesn’t come back to us right… It’s not lost on me that many of you can make motions on this commission, and the work gets done right away, so this is yet another example… I’m going to continue to point it out. That was me being restrained.”
Arreola said GRU “does not have an increase in customer base,” but property values are growing, so that provides more of an opportunity for an increase in revenue on the GG side than the GRU side.
Hayes-Santos told Johnson that he’d had an experience “just last week” where GRU hadn’t responded to a motion he made “months and months ago… I think it’s an issue with our system that doesn’t work well… It’s frustrating and I hear you, but I want you to know you’re not alone in that.”
Johnson said she would support the motion, and Poe said he would, too. Poe said that in addition to more opportunities for revenue on the GG side, “We can have a serious discussion about programmatic cuts… We haven’t, really, I think a lot of us.” He also said they could scrutinize GRU’s operations budget more closely.
During public comment on the motion, Nathan Skop said it had been obvious to him, as a former Public Service Commissioner, that GRU couldn’t legally engage in discriminatory rate-making, so any assistance program would have to be on the GG side. “Now, the reason for the subsidies is because you are about to increase the largest multi-year unjustified rate increases in GRU’s history on top of people that are least able to afford it… So your solution to everything is subsidizing it, but you never consider to cut your spending and stop expanding government.”
Armando Grundy-Gomes said Duncan-Walker’s “point was very well made when she was talking about a level of discomfort… Those of us that watched the videotape, there was no misunderstanding… It’s uncomfortable for me to watch Commissioner Johnson be that uncomfortable… It happens too much and too often.”
The motion passed 5-2, with Hayes-Santos and Saco in dissent.
Electric and wastewater rate increases through 2027
They next discussed a resolution for a 3% annual base rate increase on the electric system (after this year’s 7% increase) and a 5% annual base rate increase on the wastewater system from fiscal years 2023 to 2027. Arreola said that while future commissions could reassess this every year, the intention was to put forward a plan. He moved the resolution, and Hayes-Santos seconded the motion.
During public comment on the motion, Skop said that revenue requirements should drive rates; they shouldn’t be set years in advance. “Low income households have every right to be upset because what you approved, or are poised to approve, represents a 20% increase in electric rates spanning the next five years, as well as a 25% increase in wastewater… How are people going to pay for that, Mayor Poe?”
Ward said he wasn’t looking forward to the increases: “I don’t want to pay it myself. I believe it’s necessary… I want to point out that one of the reasons we are where we are, cost-wise, is that the people of Gainesville have consistently said ‘We want renewable energy.’ And that predates everybody up here. Well, one of the ways we do that is by having a biomass plant, a renewable energy plan… Renewable energy is not as cheap as, say, coal.”
The motion passed 5-2, with Johnson and Duncan-Walker in dissent.
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