Facebook Twitter

UP&L CUSTOMERS’ GAIN IS THE CITY’S LOSS
REBATE WILL HURT S.L. THE MOST, CAUSING A $600,000 LOSS IN FRANCHISE TAXES

SHARE UP&L CUSTOMERS’ GAIN IS THE CITY’S LOSS
REBATE WILL HURT S.L. THE MOST, CAUSING A $600,000 LOSS IN FRANCHISE TAXES

Sandy City's Finance Director Arthur Hunter wasn't exactly thrilled when he opened up his power bill last Friday.

"I realized there was a problem when I saw that rebate," he said.For thousands of Utahns, the rebates on recent power bills may be cause for joy, but for some public officials the rebate has meant a loss in franchise taxes and a surprise headache, especially as they try to tie up this fiscal year's budget.

Some officials, like Hunter, didn't realize the implications of the rebate until just recently.

For Sandy, $80,000 in revenues are expected to be lost. However, the city's budget loss is expected to be covered by fees generated by a brisk pace of construction, said Hunter.

The state's capital city isn't so lucky.

"The effect of of UP&L's actions on our franchise tax collections is serious. We have been told by representatives of UP&L that we will lose approximately $600,000 in franchise tax collections," said Salt Lake City Mayor Palmer DePaulis in a letter to the City Council.

To make up the losses to Salt Lake City coffers, DePaulis last week proposed cutting $350,000 from what's left of this fiscal year's department budgets. The remaining revenues would be made up with a Federal Emergency Management Agency settlement for the 1983 and 1984 floods, the city's own power bill rebate - about $190,000 - and money from a contingency fund.

The drop in funds hasn't affected most other Wasatch Front communities as dramatically.

W.V. will lose about $127,000

Russell Sanderson, West Valley City finance director, said that his city expects to lose about $127,000. Cuts will come to city departments in areas like supplies and equipment.

Sanderson explained because of the way the city disburses money to departments each month, the crunch won't be that severe. The city expects to get about a $14,000 rebate on its own electric accounts.

"It hasn't gone unnoticed. Every dollar counts, especially when you get to this time of the year," he said.

Municipalities must end their fiscal year on June 30 with a balanced budget.

Midvale, Orem are optimistic

Both Midvale and Orem officials say they don't expect any adverse effects. The loss in franchise taxes is expected to balance with rebates on city electric accounts.

Orem Treasurer Dean Nickels said that mild winter weather produced a surplus in amounts budgeted for electricity that will also help offset an estimated $55,000 in lost fees.

Midvale City Administrator Michael Siler said, "It's about a wash."

Midvale expects to lose about $9,700 and gain about that much back in rebates.

Davis County losses may be marginal

Drops in revenue in two Davis County towns are expected to be marginal. Farmington and Centerville are both expecting to lose about $10,000. Layton officials have yet to determine how revenue will be lost.

The rebates to UP&L customers started showing up this month in bills. The $51 million lump sum credit results from a $27.5 million stipulated settlement authorized by the Utah Public Service Commission as a final resolution to the so-called Simonelli case for overcharges in UP&L's coal purchasing activities between 1982 and 1986. It also came as a result of a $23.5 million reduction in the company's energy balancing account.

Some 58 cities and the Navajo Indian Reservation levy a franchise tax on UP&L customers in Utah.

Cities that have their own municipal power systems including Bountiful, Murray, Provo and Kaysville, weren't affected by the rebates. Other cities including North Salt Lake, Woods Cross, Riverton and Bluffdale don't charge franchise taxes.