Bountiful City’s 2016 Power Raid Spin

A new year and the same spin. As I’ve documented for years, Bountiful City uses it’s power company to avoid truth-in-taxation requirements by manipulating power rates/fees. This was finally admitted in their last few letters:

…are used to offset what otherwise would be a significant increase in property taxes.

In their now perennial spin letter (verbatim to last year’s letter) they again herald how great it is to be able to dodge a tax transparency law other cities need to follow and can fleece naive citizens and charities to the tune of  about $2.46 Million this year (around $100,000 more than last year).

Their letter continues the same spin about “investors” and “dividends” both of which I debunked in last year’s post. Like I said then, if we’re really investors, then they better be filing with the SEC and I’m sure the SEC would love to meet with them to discuss their illegal use of investor returns. Talk about patronizing.

I won’t go into further detail on the other sophistry contained in the letter (see the above link to last year’s post for that). I will conclude with this: Bountiful Power’s rates remain higher (for up to 400kWh) than Rocky Mountain Power which has more oversight, regulatory, and tax overhead (9.25 cents/kWh versus 8.85 cents/kWh). Oh, and Rocky Mountain Power actually does comply with the SEC and return dividends to their investors.

As an aside: Bountiful’s City Council’s meeting on June 14 at 7PM will official transfer their power slush fund loot into the city coffers. Feel free to attend/email but don’t plan on them giving a rip on what you have to say (the decision was made long before the council meets).

Bountiful City’s Fallacious City Power “Dividend” (Update)

Maybe the Kaysville’s citizen revolt on its power transfers has Bountiful City worried. Accompanying this month’s Bountiful City Power bill is a mandatory notice letter that goes out of it’s way to shout praises that the city opts to overcharge you on power (and avoid truth in taxation) and tries to convince you that such is a “dividend”:

Viewed in another way, these transfers are a “dividend” to Bountiful Taxpayers as the result of the taxpayers’ original investment in the City’s power infrastructure.

It seems that city believes that dividends are not returned to investors to do with as they please, rather, dividends must be returned to the company (Bountiful City) to do with as it pleases. Unfortunately, Webster doesn’t seem to agree

finance : an amount of a company’s profits that the company pays to people who own stock in the company

I also have a feeling the SEC would frown on a company unilaterally spending it’s investors dividend. This years take from taxpayers forced investors: a cool $2.38 Million.

Almost humorously, is that the city’s own words sum up the whole reason they continue to spin the power overcharge – a convenient vehicle to dodge truth-in-taxation and cloak the actual tax burden and cost of government:

…these dividends are used to offset what otherwise would be a significant increase in property taxes.

Doubly humorous exit quote from the letter:

The transfers also provide a means for reimbursement of the…services provided to non-property tax paying groups such as non-profit organizations, churches…

Shame on those dastardly charities and religious community service zealots! Glad we could stick it to ’em.

UPDATE (June 8): I understand that the Bountiful City Council will meet tomorrow to officially transfer the $2.38 Mil. during their scheduled council meeting. Feel free to attend or email them about it. Good luck getting them to switch off the gravy train.

Dodging Truth-In-Taxation With Municipal Power Rate Manipulation (Kaysville, Bountiful)

Last year, Kaysville residents successfully blocked the city from using its power department to overcharge them on power and pocket the excess money in city coffers.  The same practice continues in other Utah cities with their own power generation departments (notably, Bountiful City). Cities engaging in this behavior benefit in two ways. First, cities can, and do, falsely claim that they keep taxes low (power rate manipulation cloaks the true tax burden). Second, they avoid scrutiny from legally required truth-in-taxation hearings (instead, they just increase power rates or customer charges). Now that Kaysville City can’t hide behind the power department, the uncomfortable truth of actual tax burden is emerging (Utah town proposes 102% property tax hike):

A proposal on the table in one Utah town could end up doubling property taxes. That proposal in Kaysville would increase property taxes by 102 percent. City leaders say the tax hike is necessary to counter a ballot initiative last year, known as Prop 5. In November, voters restricted Kaysville from using money from the city-owned power company for general fund expenses. “There is no public process there, there is no transparency,” Gregory Frank, a supporter of Prop 5 told ABC 4 Utah’s Kim Johnson last April. “What we’re trying to do is keep Kaysville city from circumventing truth in taxation laws.”

Progress: Kaysville Residents Temporarily Stop Power Funds Transfer (Update – Now Permanent)

I just found out about this, but kudos to Kaysville residents on their fight: Kaysville council votes to cancel fund transfer

Funds will not be transferred from the city’s electric utility fund for use in its general fund, after a vote taken on Tuesday.

City council members voted unanimously to support the amended budget, after hearing testimony from concerned citizens earlier this month and discussing the transfer at a work session last week.

…A group of residents opposed the transfer from the outset and collected enough signatures to get an initiative on the ballot this coming November, that would prevent the city from making transfers in the future.

In light of the initiative, council members decided against transferring the funds this year.

Clearly, the fight isn’t over yet. The real victory will be if the initiative is passed and this insidious practice ends.

Hopefully, that will also bode well for other cities, including Bountiful (now transferring $2.37 million), where it appears others, besides myself, have taken notice: Bountiful fund transfer raises ire.

UPDATE (November 2013): Kaysville residents just made this permanent.  Proposition 5 which prohibits such transfers passed during this election.  Congratulations!  Hope more cities will follow suit.

Utah’s Clean Air Dupe: Endless Tax Increases, CNG Monopoly, And UTA’s Stealth Bailout

UPDATE: Herbert has signed the bill.  He’s bailed out his buddies and created a new, cloaked and uncontrolled taxation vehicle.  Progressives rejoice.

Who can say they don’t want clean air?  So that should justify any action that would creates a government-ordained monopoly and open a larger avenue for tax increases that entirely undermine truth-in-taxation?  Apparently.  Just look at the end result of SB275 (“Energy Amendments”).

The legislation gives Questar (“a gas corporation”) a virtual monopoly on CNG (natural gas) stations and infrastructure.  CNG vehicles are an increasing market and prime for expansion.  Rather than allow free enterprise and businesses (small and large) to enter the market and ensure competition, the legislation will strangle the market and provide significant advantage for what will amount to a state utility company (Questar).  Instead of using a competitive process for infrastructure and allowing gas stations meet CNG demands,  the legislature and Governor Herbert are primed to severely restrict entry in the market.    All this amounts to is a juicy shade of big government intervention and crony capitalism.

As a “double whammy”, the legislation allows all layers of government to increase gas rates (“in the public interest”, of course) when they feel like it.  As I’ve well documented Utah cities with a municipal power company are notorious for manipulating rates (overcharging) and transferring the excess into their general funds (see here too).  They then turn around and speciously tout low property taxes (without factoring in the rate manipulation).  If signed by Governor Herbert, the barn door will be thrown wide open for not only cities but also counties, special districts, and the quasi-private Utah Transit Authority (UTA). This action will also surreptitiously help bail-out a financially foundering Utah Transit Authority.

The end result is and end run around truth-in-taxation requirements, gas rates for your home as well as CNG vehicles will rise, and government runs on the Questar bank (while claiming your taxes are low)…with the added bonus of a constriction of market entry and competition.  Milton Friedman in “Free To Choose” warned about the unintended consequences of government-corporate regulatory development.  This is just another case study in the making.

Please call Governor Herbert (801-538-1000) immediately and ask him to veto SB 275 (this is your last chance). Too late – see the update at the top.

For more detailed background information, see this post.

Kaysville Cites Bounitful In Tax Increase Through Power Rate Manipulation

Kaysville City decided it wanted to its increase budget. In doing so they preferred to avoid truth-in-taxation laws and artificially raise electricity rates through the city-owned power company. This strategy has been perfected by Bountiful City which has, for decades, consistently transferred millions into its general fund while deceptively claiming lower property taxation rates. Upset Kaysville residents demanded answers resulting in the city specifically employing Bountiful’s sophistry on ‘lower tax rates’ and ‘making churches pay’:

…The budget proposal included a plan to raise electricity rates since the city has its own power system, rather than raising tax rates.

[snip]

“It’s inappropriate to transfer money for the general fund,” said Floyd Morgan. “You’re just circumventing asking for a tax increase.”

“…[Jana Whitaker] I’m not in support of raising our electrical rates in order to fund things that are not for electrical needs.”

[City Manager John Thacker] used Bountiful as an example saying the city transfers $2 million annually, a move that allows them to keep their tax rates lower.

Renters, schools and churches do not pay property taxes, yet benefit from city services including police, said city council member Mark Johnson.

[Transcribed from the Davis County Clipper June 21, 2012 article “Divided vote on disputed budget” – not available on the web]

The tax rate thing is pure spin. The fact is the city knows raising a power rate will attract less attention and the city council also knows a tax or rate increase results are identical: less money in the family budget and more money in city coffers. They are playing a shell game to cloak the true tax rate (I debunked Bountiful’s same claims here).

Next is the awful justification taken from Bountiful City’s playbook (see here and here): we need to make those dastardly churches and charities pay for services. All those rotten LDS, Catholic, and Protestant churches and charities apparently are leehes and certainly don’t carry their weight in community services. C’mon who believes that?

As for renters not paying property tax – who do they think they are fooling? Do they honestly think a landlord is not going to pass property tax costs on to his/her renters?

It is also notable that municipal power companies are exempt from Public Service Commission (PSC) oversight. Utility rate manipulation appears to be the norm for cities with their own power companies. This type of abuse needs to end whether it be relinquishing such companies, placing rates changes under truth-in-taxation regulation, or, at very least, placing these power departments under PSC oversight.

The 2012 Bountiful City Power Rate Overcharge

Another year goes by and Bountiful City continues to use it’s power company (Bountiful Light and Power) to intentionally overcharge customers in order to secure over two million dollars for it’s general fund…and conveniently avoid any truth-in-taxation rules.  The taxation rule is avoided by manipulating power rates to increase the transfer to city coffers.  Later, the city will crow about it’s low tax rate despite the cloaked tax in the power rates.  When that is added in, the tax rate is not much to crow about – past calculations adding in the the power transfer effectively doubles the tax rate.

This year the transfer comes to $2.28 million. That’s about an $80,000 increase from last year and may take into account last year’s rate hike they imposed and could also include the mandatory recycling fee increase (depends on how that fee can be used – the recycling firm may have demanded more money).

Previous years’ analyses have consistently shown that Bountiful residents are charged significantly higher electric rates and “customer charges” compared to the private (and heavily regulated) Rocky Mountain Power.  I don’t have time to crunch numbers this year (rates or taxes)…maybe I’ll try next week…or the week after.