Guest Commentary: Hidden Taxes in Lubbock Utility Bills Bring More Money Into City
By Mikel Ward, Special to KFYO.com
For many years, every (Lubbock) City Council has spent more and more and while adding tremendous debt. The vast majority of the well over one billion dollars we owe is for needed utility related projects. Total debt service for 2016-17 is $150.8 million includes $52.6 million interest. To generate enough money to pay debt service, satisfy their ever expanding spending addiction and still provide basic services, the City has used very creative ways to substantially increase revenue while claiming to not raise taxes. The sneakiest way guaranteed to increase revenue every year is to tax utilities in several ways.
I have watched the hidden taxes embedded in our utility bills escalate every year as rates have gone up to generate more revenue to expand services and to pay more debt service. Then 5% franchise fees are charged on these revenues. Some City officials deny that they are taxing funds that will pay for a total of $103.2 million debt service in 2017-18, but the budget charts show that we ARE paying taxes on these payments.
Stormwater debt service, including $5.3 million for street repair will total $16.5 million. Water/ Wastewater will pay a total of $64 million, including almost $1.4 million for vehicle/equipment and $318,644 for Citizens Tower debt. Lubbock Power & Light (LP&L) will owe payments of $22.7 million, including almost $2.5 million of the Citizens Tower over $4 million payment. Franchise fees can and should be made about $5 million less by deducting debt service from operating revenues before calculating these fees.
Additionally, property taxes on the value of each utility’s fixed assets called PILOT fees are also charged to ratepayers along with each utility department’s share of indirect cost allocations. LP&L Electric and Solid Waste both have added sales tax charges. Next year, all but Stormwater will have proposed increases, either in rates or in volume used or both. This will burden customers with even more taxes collected to be used for unrelated purposes. These proposed hikes could be avoided if the Council would start scaling back enormous utility taxes hidden in our bills.
Despite the Solid Waste Department moving to the General Fund where it will not be taxed, these “transfers” into the General Fund in the proposed 2017-18 budget will increase to $35.7 million, including $1.8 million from the airport. These transfers will furnish about 17% of General Fund revenue and would equal over 25 cents of property tax (at $1.39 million per penny).
Many ratepayers are struggling to pay huge monthly utility bills and have no idea how much of the total amount are taxes having nothing to do with the services they must have. We must demand that the City Council admit the extent of these taxes and come up with a plan to begin to reduce them before hardworking taxpayers can’t afford to live in Lubbock.
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