Tag Archives: water utility fee

City Council, City of Peoria

More taxes tacked onto water bills

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I couldn’t attend the council meeting last night, but I see in today’s paper that they’ve tacked on some more taxes to our water bills: “The council also voted to assess a 5 percent water utility tax . . . expected to generate $1.5 million annually.”

Technically, the city is taxing the water company, but Illinois American Water is fully expected to pass that cost on directly to consumers. And the selling point of this tax as opposed to a property tax increase is that it can also be collected from non-profit organizations. “City officials have estimated the typical residential customer of 6,000 gallons of water a month will pay $1.70 more a month,” according to the paper. Add that to the $6 per month we’re already paying through our water bills (the so-called “garbage fee”), and now we’re up to $7.70 — a 28% increase in water taxes/fees for the “typical residential customer.” Pretty soon, we’ll be paying more in taxes/fees than for the water portion of the water bill.

A few other interesting things about this tax:

  • “[T]he council voted on a host of issues that leaves the city with a $1.4 million surplus heading into next year,” the paper explains, and this five percent tax will generate $1.5 million annually. A quick calculation tells me that only $100,000 was needed to actually balance the budget when all was said and done last night. But the council established a tax that will generate $1.5 million. A bit of overkill, wouldn’t you say? If they had established a 1% tax, it would presumably generate $300,000 — more than enough to cover the deficit left after other actions were taken last night.
  • Despite coming up with a new revenue source that puts them in the black by $1.4 million, the council still decided to lay off 16 police officers. Public safety is evidently not real high on the council’s priority list. That’s okay. It’s not like we have a lot of crime in Peoria or anything. I’m sure the officers that are left can learn to work smarter, not harder, or something like that.
  • Speaking about the new water utility tax: “This isn’t money we’ll wildly run out and spend,” Van Auken said. “We’re still facing a deficit next year.” Ha ha ha! No, the council wouldn’t wildly run out and spend it. Of course not. They’re the model of fiscal conservatism and strategic planning. You can trust them not to fritter away taxpayer money on non-essential, risky ventures.

Bah.

City Council, City of Peoria, Methodist Hospital, OSF St. Francis, Peoria Park District

Big non-profits doth protest too much

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The Journal Star is reporting that some area non-profit businesses are concerned about the possibility of the City Council imposing a 5% utility tax on water:

With the City Council weighing a possible 5 percent utility tax on water, not-for-profit organizations such as hospitals, colleges and local governments like the Peoria Park District are examining how they can absorb a cost that could impact their operations….

Chief financial officers at the city’s cash-strapped hospitals — OSF Saint Francis Medical Care Center, Methodist Medical Center and Proctor Hospital — say the proposed increase could lead to operational changes within their organizations….

St. Francis spends about $600,000 each year on water. A 5 percent utility tax would increase the expense by $30,000, Harbaugh said.

At Methodist, the hospital’s water bill ran about $300,000 last year, and the proposed increase would mean an extra $15,000 to $20,000 a year in expenses, said Cal MacKay, the hospital’s senior vice president and CFO….

Peoria Park District Director Bonnie Noble said her district is estimating a 24 percent increase in water rates for next year, or an additional $60,000 tacked onto a typical annual water bill of $250,000. She said costs for park services could go up if the water utility costs spike.

“We’d have to spread the costs,” Noble said. “You just can’t keep absorbing these kind of things and run the same kind of operation you’ve run before.”

Three entities are looked at in detail here: OSF, Methodist, and the Park District. And we have an estimated annual increase in water bills for each entity: $30,000 for OSF, $15-20,000 for Methodist, and $12,500 for the Park District. Note on the Park District’s quote that the $60,000 figure listed in the article included Illinois American Water’s rate increase, which is outside the city’s control and was not figured into the OSF or Methodist figures. So, to compare apples with apples, I took the city’s proposed 5% fee times the Park District’s annual water bill of $250,000.

Now let’s take a look at some other recent news stories about these organizations (emphasis added):

The new OSF Center for Health at Glen Park will be open to the public Sunday. The 53,000-square-foot facility is set to open its doors after 19 months of construction on the $18 million project, which includes three buildings on the campus featuring 24 primary care physicians.

–June 12, 2009

On an average day, 200 tradesmen work on the hospital’s [OSF’s] $280 million Milestone Project, designed to modernize and expand the center and Children’s Hospital….

–January 17, 2009

What’s the monthly debt service on $298 million? I think it’s safe to say that one monthly payment alone dwarfs the $30,000 annual increase in costs that could result from the city’s imposition of a water utility fee. $30,000 is a rounding error for OSF.

Methodist Medical Center will delay the final two stages of its $400 million hospital renovation project until tight conditions in the credit market begin to loosen, CEO Michael Bryant said Thursday…. Methodist will continue with the first two phases of its massive renovation plan, which carry a combined price tag of nearly $30 million and include building a parking deck and constructing a new entrance to the hospital off Hamilton Boulevard.

–November 7, 2008

The same goes for Methodist. Even a more modest principal amount of $30 million will result in monthly debt service payments that go way beyond the predicted annual increase of $15,000 to $20,000. To put this increase in perspective, a single birth can cost a patient that much money.

But here’s my favorite:

In anticipation of shrinking revenues, the Peoria Park District will cut its budget for the rest of the year by $390,000, but the public will not be overly affected. “On a $40 million budget, this is less than 1 percent,” said Jan Budzynski, the park districts’s superintendent of finance and administrative services.

March 3, 2009

So, let me get this straight: Cutting $390,000 out of the park district budget is no big deal — it’s less than one percent of the budget and “the public will not be overly affected” — but an increase of $12,500 in water fees is going to be difficult to absorb — so much so that they’ll have to raise the cost of park services? [Insert “Dueling Banjos” music here.] It probably goes without saying, but the Park District can’t have it both ways.

It sounds to me like all these protests are pretty weak. If an attempt is being made to garner opposition to the water utility fee, this isn’t the way to do it. These large organizations with their conspicuous building projects aren’t going to get a lot of sympathy from the public. In fact, hearing how little this fee would impact them monetarily, it actually makes me more favorable toward it.