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Kaysville’s Prop 5 seeks to end power fund transfers
Oct 18, 2013 | 1867 views | 0 0 comments | 6 6 recommendations | email to a friend | print

Clipper Staff Writer

KAYSVILLE — Voters here will have the final say on whether or not money from the city’s power fund can be used for purposes other than electrical needs.

Proposition Number 5, a measure that calls for “Restricted use of all Kaysville Power Department revenues,” will be on the Nov. 5 ballot.

It is an issue that has been hotly debated in public hearings and at city council meetings for the past several years.

Those who support the measure say transfers from the electric enterprise fund to the city’s general fund are a hidden tax. They argue that all money collected for the power fund should be used for power needs and  charge the city with violating the law by not informing individual rate payers of past transfers.

“For 30 years Kaysville has never had public hearings when they’ve transferred the funds, so they violated the law,” said H. Lynn Galbraith, a former city councilman.

He cited a recent finding by the state auditor which, he said, found that when customers are charged for using electricity, the implication is that electricity is what they’re paying for.

“What the city has done is have defacto transfers,” said Galbraith.

Chris Snell, also a former city councilman, sees it differently.

He said the city’s annual budget always indicates whether or not there will be a transfer and that there is a hearing on that budget every year.

“That has always been done and it has been done for decades,” he said.

“I know first-hand the importance and the nature of what the city has used the power fund revenues for and the benefits that option has brought to the city – especially a city of our size and our situation,” said Snell.

Because Kaysville does not have a large retail shopping development like neighboring communities, it relies primarily on property tax and modest sales tax revenues.

“The city has been able to manage ongoing expenses very well with the mix of property and sales tax revenues and the power fund,” said Snell. “The city having its own power company has provided an option for the city to be able to respond to things that come up that are unplanned.”

 He gave as an example, the emergency repair of a water tank several years ago that was financed by an transfer from electric funds, preventing the city from having to borrow money or raise taxes.

Proposition 5 is short-sighted, said Snell.

“It’s well-intentioned, as are most of the folks who are proposing it,” he said, “but they don’t realize the impact of tying the hands of the city council with that fund will really hinder the city’s ability to respond to emergencies in a timely manner and in a less costly manner.”

Cities have rainy-day or emergency funds for those purposes, countered Galbraith.

A fiscal impact estimate put forward by the city states that “the initiative will cause a shift of costs to property taxes of $409,244, which will require a 33.34 percent tax increase and require the use of more public debt to operate the city.”

An increase that size would amount to less than $66 per household per year, according to the argument for the measure in the voter information pamphlet.

Unlike a rate increase, a tax increase can be written off when paying Federal taxes, the statement said.

 About 2,700 Kaysville residents signed the petition to have the measure put on the ballot, said Galbraith.

“The citizens overwhelmingly supported the initiative drive,” he said. “The council is supposed to represent the citizens ... I don’t understand why they don’t support the citizens in this initiative because the citizens don’t want them to take their power money from their electric bills and overcharge them to use for other things.”

 One of the “other things”  supporters have challenged, was the use of  power funds to purchase land that has since been developed into the business park near Barnes Memorial Park.

 That money was not lost, said Snell, but became a real estate asset instead of a cash asset until the land was sold.

The resulting businesses have generated commercial property tax revenue and sales tax revenue and provided employment to many Kaysville residents, said Snell.

Using power funds for city projects has been “a tremendous benefit” to the city,” said John Thacker, city manager, adding that everything has been done in accordance with advice received from advisors.

“There was no intent nor effort to make it anything less than fully disclosed,” he said.

In a prepared statement, Thacker said: “There are portions of the proposed law (Proposition 5) that are in conflict with state law and we are not certain how to resolve that. There are certain terms that need more definition in order for us to know how to administer the proposed law. If it passes there is much work to be done.”

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