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Could power fees replace city property taxes? (Poll added)

Photo by Carly Farrell

Photo by Carly Farrell

With just a few weeks left before local government budgets for the next fiscal year have to be submitted to the state, officials are looking under rocks previously unturned in an effort to avoid any increases in local property taxes.

There are whispers among some elected officials who sit on the City Commission that some thought has been turned to the Albany Water, Gas & Light Commission as a mechanism that may be able to prevent a proposed 1.33-millage increase.

WG&L was once famously called the "goose that laid the golden egg" for city leaders by former city commissioner Arthur Williams. And, as it turns out, it may end up laying a whopper.

In looking at electric rates and property taxes, there is a precedent that would allow city leaders to raise utility rates to offset the city's portion of taxpayer's property tax bills.

If the proposed 1.33-mill rate increase goes through, property taxes are expected to rise to $14.5 million in the city's $100 million spending plan.

If city officials wanted to do away with property taxes for homeowners, WG&L would have to raise its electrical rates by about 15 percent to generate the $14.5 million needed to offset the loss of property taxes, an increase of 1.5 cents per kilowatt hour, according to WG&L Finance Director John Vansant III.

For me, that would mean that the electricity portion of my utility bill would increase by about $15 this month. If that remains the average over the course of a year, it would translate into a total yearly increase of somewhere between $180 and $240.

And since the city portion of my last property tax bill was $252, it would result in a net gain.

But there would be a lot of variables at play in terms of how switching to a utility-only form of taxation would impact the residents of the city.

The dreaded tax assessments would go away, but instead homeowners and renters alike would have to focus on the consumption of electricity as the main determinant of how much money would end up going into city coffers.

Those who benefit from writing off taxes on personal income tax returns would lose that perk, and those who live in the city but are in Georgia Power's territory would get a real coup by having their obligation for city property taxes stripped without an increased power rate.

But on the flip side, the rate increase would put WG&L's more in line with Georgia power. According to Vansant, summer rates would be just below those of Georgia Power's while winter rates would likely sit just above Georgia Power's.

According to the state Public Service Commission's website, Albany's electrical rates currently sit among the lowest in the state. For 500 kw consumption, WG&L is the eighth lowest.

If the power-cost increase were to happen, it would place WG&L as the 35th lowest in rates among utilities in the state, still ahead of Georgia Power's position up in the 60s.

Then there is the moral question.

Many of the residents of the city find themselves renting or leasing older housing stock that is poorly weatherized and rarely maintained.

Slum lords entice the poor and disadvantaged by offering dirt cheap rent, but neglect to tell people that — because they have almost no insulation, outdated HVAC units and ancient windows and doors — they'll pay triple their rent in utility costs.

If WG&L is allowed to go up, it will be these people who are hurt the most. While property tax opponents point to them as not paying taxes, the reality is that most property owners factor tax costs into the rental payments charged to tenants.

A $600 bill that is nearly impossible to pay would jump to $660, while those who live in newer or more weatherized and energy-efficient homes reap the benefits of no property tax.

It's a simple idea with complex implications.

Tell us what you think. Vote on a poll at Albanyherald.com and tell us if you'd be willing to drop the city portion of your property tax for a 15 percent increase in your power bill.

Email government reporter J.D. Sumner at j.d.sumner@albanyherald.com.

Comments

FryarTuk 1 year, 10 months ago

Is all property in the city served by WG&L. If so, yes I enthusiastically support the proposition to raise utility rates and discontinue property taxes. Although I do believe slum lords should be required to improve their rental units to meet reasonable standards of energy use.

If the city adopted this practice, it would increase the desirability of living in Albany as well as possibly reversing the decline of property values and census. It would be a feather in Mayor Hubbard's bonnet.

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w4jfc 1 year, 10 months ago

I totally agree, as it is time to take a stand and "stop" rasing property taxes. Hank

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Environmentalist 1 year, 10 months ago

Where is the poll ? ? I fully support this. Section 8 housing has practically done away with private rentals, but everyone has to live somewhere. Many don't qualify for assistance, but the landlords have borne the brunt of the property tax burden. Tenants don't pay School Taxes, the landlord does, but they can't raise the rent in this economy, even though taxes and other expenses have gone up. Let the tenants pay some of this though their power bills.

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KaosinAlbany 1 year, 10 months ago

That may be a viable option but the City would need to decrease the millage rate for this to work and so the property taxpayers don't have to pay high property taxes and high WG&L bills. Even without a tax increase we still have one of the highest millage rates in the state.

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benh1936 1 year, 10 months ago

This would mean there would be no city portion on your tax bill at all.

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Abytaxpayer 1 year, 10 months ago

Question what is the viability of raising consumption tax (sales tax)?
While creating a utility tax sounds good on the surface it would just be another hidden tax charged to a few. What about the number of free loaders that are already working the system to beat WG&L out of paying their bill (guess where WG&L ranks in write-offs in the state). Sales tax just seems a little fairer, if you have spendable income you support city services with each purchase, utility tax would again just fall on a few to pay for services for everyone paying or not.

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benh1936 1 year, 10 months ago

It concerns me that people will be really careful to conserve their utilities, then the city will say they still did not get enough money and rates will shoot up. Why can't these people learn to stop wasting money and make some realistic cuts? Too many city workers with too much pay and too little work to do would be good for starters. Cut stupid spending.

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chinaberry25 1 year, 10 months ago

You would lose the tax write off if you do this. Property owners do not want to go this route. And utilities are furnished in these welfare homes. so that would not work either. Some folks I know who get utilities free make no effort to conserve. They run it wide open all day and night.

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dingleberry 1 year, 10 months ago

I don't think utilities are furnished in the welfare homes unless they are multi family, perhaps some of the actual "public housing". Perhaps JD can check this one out because if so what you write is absolutely pertinent.

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whattheheck 1 year, 10 months ago

If the rates were increased, this would be a way to get money out of portions of the $400 million in tax exempt property. In that case something is surely better than nothing. But it sounds like a nightmare to administer.

And since the county would still have to get its money the old fashioned way, the "dreaded assessment" process will still be there as will the need for the county tax assessor and tax collector. Every year, the dreaded tax bill would still arrive, but it would be a little smaller.

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dingleberry 1 year, 10 months ago

Very good points on the tax free issue. As an example, the public housing authority's1,000 units and senior exempt like Lamad Ministries $12 million complex for starters not to mention the mega churches holdings.

The comments on the requirement to still do taxes as is because of the county and state monies is also valid. If you think about it, the proposal needs a lot more analysis since this could be a stopper. Things that sound good on the surface go to the devil in the details which we lack.

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