Legalectric

Now here’s a way that local governments can deal with the utilities pulling the rug out from under them by cutting, recalculating, suing, and whatever else they can think of to eliminate the utility personal property tax that provides siginifcant revenue. Red Wing is in the midst of doing a deal with Xcel about utility personal property tax, as is Goodhue County — why isn’t the entire state instituting this instead of caving? I’ve got to dig up some papers in this pile, but that means getting the Exhibits done for Mesaba… finishing my testimony & Exhibit chart, so in short, it’ll be later rather than sooner, but this article has to get out there for consideration:

Higher electric tax proposed

City wants $750,000 in added yearly revenue

BY STEVE SCOTT
Pioneer Press

Maplewood is negotiating with Xcel Energy on the details of an increased electric tax that would produce $750,000 in additional annual revenue for the city, municipal officials say.

As it does in several metro-area cities, Xcel collects what the city calls a monthly franchise tax from all electric users, at the city’s request, and passes the money along to the city.

Xcel has collected such a tax for Maplewood since 2005, but the city is seeking more than a fivefold increase for 2007.

“We’ve always looked at this as a way to reduce property taxes,” City Manager Greg Copeland said.

“We have 133 properties in Maplewood that are tax-exempt (such as schools, churches and railroads). What we are hoping to do is collect some additional revenue from these entities from the franchise tax.”

Because the electric tax is spread out over every utility user in the city, not just property owners, Maplewood officials plan for that increase to reduce next year’s anticipated property tax increase from 11.4 percent to 6.4 percent.

The increased electric tax, however, would be applied across the board to residential customers, small businesses and large commercial and industrial accounts.

For example, the city’s residential customers, who now pay a franchise tax of 50 cents a month, would pay a proposed $2.70 a month.

City officials say the increased electric tax would equate to property tax savings ranging from $1.80 a year on a $150,000 home to $43.80 a year on a $400,000 home.

Many of the nearly 20 residents who spoke out on the issue at last week’s City Council meeting were skeptical.

“This is like putting two quarters in my left pocket â?¦ by taking two quarters out of my right pocket,” John Gores said.

Some residents questioned why residential and commercial customers would be assessed the same percentage increase. Small-business accounts paying a monthly electric tax of $1 to $6 would pay a proposed $5.40 to $32.40. Large commercial accounts would pay $243, up from $45.

Other residents asked why the electric tax wouldn’t be prorated among property owners according to energy usage.

“Flat taxes like this are extremely regressive,” William Robbins said. “If these taxes might be collected, I would hope it would be with fairness and equity.”

Colette Jurek, government relations manager for Xcel, said the company’s policy since 2000 has been to assess a flat tax.

“Our company believes a customer’s energy consumption is not proportionate to the amount of city services they use in a month,” she said.

City officials agreed with some of the residents’ objections but said Xcel would have to agree to any changes. Mayor Diana Longrie moved to table the issue to allow the city to negotiate with Xcel for “a more proportionate tax rate.”

Because of that delay, it’s likely an increase would not take effect until March.

The city indicated it would apply the revenue from an electric tax increase toward utility charges at city buildings, including the Community Center; street lighting; utility right-of-way maintenance; energy conservation projects; and weatherization of low-income homes.

Steve Scott may be reached at 651-228-5526 or sscott@pioneerpress.com.