Spring City defends decision to increase sales, use taxes on utilities

 

Terrel Davis

Staff Writer

4-13-2017

 

SPRING CITY—Spring City has adopted new fees for power users.

Soon, residents will see a 6-percent sales-and-use tax on electricity and natural-gas bills.

Additionally, people who generate their own electricity through solar or other means and then sell the leftovers back into the power grid—a process known as net metering—will pay a fee for the service.

The changes were made during a meeting of the city council on Thursday, April 6.

Like any tax proposal, this one met resistance from residents. Mayor Jack Monnett and other council members tried to explain their reasons for the new power-use tax, chief among them being the upkeep of the power system itself.

The “municipal electricity sales and use tax” has been allowed by Utah State law since 1995. Spring City has resisted implementing it to this point.

“This has been put into play all over the county,” Monnett said. Spring City was of very few communities without the tax, he said.

“The other thing is, the money collected by this tax will go to the general budget, and we need that. It is not frivolous but needed for infrastructure.”

Such infrastructure includes upkeep and expansion as needed of power and natural-gas systems. But the first priority, and Monnett later said an urgent one, is to improve flow and make other improvements at the natural springs that are the city’s culinary water source.

Councilman Neil Sorensen said that for years the city had been “living off the electrical fees,” meaning that the electric fund had subsidized the city’s general fund at the expense of infrastructure. “We can’t keep that up,” he said.

Councilwoman Kimberly Stewart elaborated, “We have had to separate the cost of the services from the cost of maintaining the infrastructure. Otherwise, the money that comes from the power system has to stay in the power system,” instead of being allowed to bolster the general budget.

Stewart said the regressive use tax, rather than a flat household fee that might otherwise have been charged, was “the good thing if you call it that” about the plan. “We need this to bring up the revenues to better balance with the cost of maintaining those services,” he said.

Some city residents saw no good thing at all, insisting that the city’s electricity rates were already too high.

Mayor Monnett addressed that and blamed the city’s comparatively large lot sizes (which have been a sore spot in Spring City land-use discussions in years past). Because of those lot sizes, he said, there was more distance between homes and therefore fewer hookups per area.

So, he illustrated, a single block in Spring City might have only four hookups, as opposed to 12-16 in a block in Salt Lake City. That meant the Salt Lake City block’s infrastructure costs would be spread among those 12-16 households, whereas in Spring City it would be divided into a much larger-per-household four-way split.

Raising more revenue for power system maintenance and growth was likewise behind the plan for a fee that net-metered homes would be assessed for connecting to the power grid.

The fee is based on the power-output rating of a home’s generating system, from 1 to 5 kilowatts.

The power board recommended, and the council adopted, a fee of $4 per month per kilowatt rating, with a 5-kilowatt cap on the size of such systems.

In practical terms, that means the small handful of residents who currently use net metering will see additional fees of $4-$20.

Von Mellor, head of the city’s power board, said, “With this, people with solar or other generation that are hooked into the system pay for the upkeep of the grid system.”

Mellor said the fee could be amended, and probably would be. “We are sure we will have to tweak it later, but we need to have this in place.”

The council discussed other issues during the meeting:

  • Councilman Cody Harmer proposed, and the council adopted, that May 6 be designated as the city’s clean-up day after a discussion of junk vehicles and other messes on the yards of residents.
  • With the departure of Mark Mickel as the city’s former fire chief, the council appointed Clark Christensen to fill the spot. Christensen is now both the fire chief and the police chief, which the council felt would save the cost of one city employee.
  • Jeff Jarman from the Sanpete Food Pantry requested a $250 donation from Spring City to help meet the financial match required for a large grant the organization is seeking. Jarman said 141 families had benefited from the food bank. When both councilmen Harmer and Sorenson offered to forego two months of their council pay for the cause, the council approved—and doubled to $500—the donation request.
  • What to charge as rental fees at the newly renovated Old School Community Center? The council reviewed rental fees at other venues in the county—the Moroni Opera House, Fairview’s Peterson Dance Hall and the Ephraim Co-op, for example—but came to no decision.