Stewart’s Blog: It’s Time for Electric Utility Oversight

Stewart’s Blog: It’s Time for Electric Utility Oversight

The recent handling of electric power restoration after Hurricane Hermine put the City of Tallahassee electric utility in headlines throughout the state of Florida. And while the post hurricane analysis is not yet completed, one thing seems abundantly clear: the communications bureaucracy did not perform as well as it should have after the storm moved through Tallahassee.

The response to this event, coupled with a number of other factors, indicate to me that it is time for the people of Tallahassee to demand independent oversight of the electric utility.

Consider this, of the fifteen largest cities in the state of Florida, guess how many city managers are in charge of providing electric utility service? Just one. You got it, Tallahassee.

Eleven of the cities get their electric power from private utilities. Of the four remaining municipalities – Jacksonville, Orlando, Gainesville and Tallahassee, only Tallahassee places the responsibility for running the electric utility in the hands of the city manager.

A troublesome reality of the city manager model is the co-mingling of finances. In my view, the financial resources of a $300 million electric utility should not be controlled by the same person, the city manager, that is responsible for providing government services that include the animal shelter, garbage pick-up, public transportation and law enforcement.

When one of those government services comes up short, it is much too easy for the city manager to move money from the electric utility. For example, is it a coincidence that when the City of Tallahassee moved golf course operations under utility services, the finances of the golf operations improved?

And then there is the issue of 15,000 City of Tallahassee utility customers that live outside the city boundaries. These people are subject to policies and rates set by elected officials that they have no say in selecting. This is inherently unfair.

Electric power drives commerce and the provisions of this service cannot continue to be tied to a city bureaucracy that has too many distractions and too many competing responsibilities.

It is time for the business community to acknowledge that for the City of Tallahassee to become a more vibrant center of commerce, we must move toward a government model of electric utility service that is comparable to other communities in Florida.

The problem is the City of Tallahassee will not cooperate with this change. Just like the Independent Ethics Board that was voted in through a citizens referendum, it will take outside forces to develop a governance model that is more responsive to the needs of citizens and businesses in Leon County.

Despite this obstacle, it is time to begin the discussion.

9 Responses to "Stewart’s Blog: It’s Time for Electric Utility Oversight"

  1. Fire Service Fee on Tallahassee Utility bill may require Most Property Owners to Amend IRS Tax Returns since 2009

    You may not know this, but the Fire Service Fee which may appear on either your utility bill, separate bill, or property tax bill is a non-ad valorem special assessment which cannot be deducted from your IRS tax returns.

    “the fire services is not a deductible local government tax, no matter where it appears” quoting Leon County Commissioner Bob Rackleff (see 2009 entire email between County Commissioners and Administrators).

    Unfortunately when Leon County and City of Tallahassee passed a non-ad valorem fire service special assessment in 2009 on all the real property in the County, they labeled the special assessment on the bills as “Fire Service Fees”. (fire service special assessment – ordinance at bottom of email)

    This confusion has misled many property owners to report to their accountants and CPAs a deductible fire service fee, which in reality is a non-deductible special assessment (Fire Services Assessment). Many property owners may now be required to amend their tax returns. Additionally, the Rackleff email appears to indicate that our local government may have been aware that the special assessment was not a deductible expense and it appears they may have also been aware that many property owners might incorrectly deduct it on their tax returns.

    Who might be required to amend their tax returns?

    1. Regular property taxes are deductible for real property owners and homeowners. If the assessment was included on their property tax bill, they probably incorrectly deducted the fire assessment along with regular property taxes.

    2. Utilities are an expense deductible from gross income on property being used as a business. Leon County and City of Tallahassee included the special assessment on all City of Tallahassee Utility bills. Even though the utility bill labeled the special assessment as a “fire service fee”, the local ordinance makes it clear that it is not a utility or other type of fee, but is a special assessment. If the property owner deducted their entire utility bill (which is the norm) as an expense from their gross income, they may have incorrectly deducted the amount of the utility bill for the “fire service fee”/special assessment.

    3. The local government included the special assessment for the landlord’s property on their tenant’s City of Tallahassee utility bill. The special assessment is a benefit to the owner’s property, and thus, if a tenant pays the utility bill, this is an expense/benefit paid on behalf of the landlord which should be included in the landlord’s gross income as rent. If it were deductible as a property tax, this would end up being a wash. However, since it is not deductible, all special assessments paid by tenants should have been included in the landlords’ gross income with no accompanying deduction. Most landlord’s have no idea that the City/County has forced the tenant to pay the landlord’s non-deductible special assessment directly in the tenant’s utility bill. Almost all landlord’s (commercial and residential) may have incorrectly calculated their gross income on their tax returns since 2009.

    Most property owners in the City and County may have to file amended tax returns.

  2. People without power for 5,6, or 7 days from a minor Cat 1 hurricane is unacceptable. No one should have gone more than 3 or 4 days without power from such a weak storm. We did not have hurricane force winds in Tallahassee. There may have been gusts to near hurricane force, but none were recorded.

  3. Steve, I believe you are completely correct – it’s time for Tallahassee to have independent oversight and management of the utility. When taken as a whole over the past 8 years or so, the repeated incidents of the city’s govermental misconduct, secrecy, incompetence, and generally unethical actions are far too egregious and too many to allow them to manage such a critical resource as the local utility.

    If I recall, a reader on another TR article posted a recent comment that in Florida, Tallahassee could easily be hit again with a hurricane while another area of Florida is also being hit with a different hurricane. As the capital of the 3rd most populous state in the country, Tallahassee cannot afford to be largely without power and communications due to deficient utility structure and/or power grid strength. We are reputed to be a highly-educated, forward-thinking city, but our utility is run in an outmoded way other cities have discarded. Having a mismanaged utility with a deficiently constructed power grid and bungled, confused emergency responses is no longer acceptable.

  4. Good info. Thanks. I believe the same can be said for our airport. I always thought it would be best if it was run by an independent airport authority. I would enjoy seeing some research on that topic too.

  5. You didn’t mention that our City administration is grossly incompetent. $7 Million is spent on a “pedestrian” bridge, but yet we don’t have an emergency plan to handle emergencies. Go figure.

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