On December 8, 2010, the city commission was presented with the final numbers for the fiscal year 2010 city expenditures. Unreported to the community by any media outlet was that the city commission would be deciding the fate of an $8 million surplus in the electric utility fund.
The information provided to City Commissioners showed that the original projection of a $3 million deficit for the electric utility, turned into an $8 million surplus – a net change of $11 million.
In layman terms, the electric utility charged $8 million more in 2010 than it cost to provide electric service or basically made $8 million in profit. This is after the $22 million transfer to the general fund.
What is the significance of the $8 million? Tallahassee Reports determined that the revenue collected through property tax is approximately $33 million. The $8 million surplus collected through electric rates would equate to a whopping 24% increase in property taxes.
So what happened to the $8 million? A review of the video of the city commission meeting indicates that the City Manager and the Budget Director, while giving an overview of budget closeout, never mentioned the magnitude of the electric utility surplus. In addition, no city commissioner asked a question about the surplus.
Without questions or acknowledgement of the $8 million surplus, the city commission voted to transfer the $8 million to the “Working Capital/Liquidity” fund. This increased the level of the fund from $97 million to $105 million. The vote removed $8 million out of the local economy.
What is the economic impact of taking $8 million out of the local economy? Using factors published in various economic growth studies, the impact of $8 million translates to any where between 60 to 120 local jobs. Currently, there are 7,600 people unemployed in Tallahassee.
The ironic twist to this report is that the city commission vote to keep the $8 million took place during the City’s “Financial Sustainability of Tallahassee During Recession Initiative.” The initiative was created to explore approaches that will “facilitate job growth and economic value” in our community. The vote taken on December 8, 2010 would seem to be counter to the initiative.