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Monday, Aug. 29, 2016

Surcharge won't be on ballot

Tuesday, August 27, 2002

Council votes to redraft plan for April election

SIKESTON - Sikeston City Council members won't ask voters to make any decisions this November on a "Payment in Lieu of Taxes" surcharge on electric bills.

Three bills, each of which would have placed before voters an option to amend the Home Rule Charter and establish a PILOT on the Board of Municipal Utilities' electrical sales, were considered during Monday's evening special council meeting with much discussion. PILOTs are used by cities to bring in revenue that would normally have been received if the power provider was a taxable entity.

The first option, if approved by voters, would have amended the Charter to place a 10 percent surcharge on all retail electrical sales - all residential, commercial and industrial customers in Sikeston - raising $1.4 million for the city.

BMU board member Joe Blanton said the ordinance and ballot language did not make clear the surcharge would be an additional 10 percent and not 10 percent of BMU's current revenues.

"New money was the intent of the council," confirmed Mayor Phil Boyer. City Manager Doug Friend said the language used was taken from Springfield's charter.

Harry Sharp said, however, that he was advised PILOTs are "taken out of the profit component" and are not a pass-through charge to customers.

Blanton also pointed out that existing BMU revenue is pledged as collateral for the power plant's bonds, but the bond insurers shouldn't have any objections if the surcharge would be raising new money.

Board member Ken Barkett said the BMU's present rates are set to meet present expenses, and that BMU could not sustain operations with 10 percent of their revenues taken away without raising rates to compensate.

Lacking a second, a motion for this bill died.

The second option would have asked voters to establish a 3-percent surcharge on all of the BMU's electrical sales, including the five cities under long-term "hell or high water" contracts for wholesale power, bringing in $1.6 million for the city. "I think this will create lawsuits - and rightfully so," said Steve Sikes. Councilman Mike Marshall agreed that the possibility of a lawsuit was high.

Josh Bill said he believes the bond covenants and contracts do provide for taxes and PILOTs to be collected. By not doing so, Bill said, they are missing out on profits.

BMU General Manager Ed Throop said profits are coming in, but are being used to pay down the power plant's debt.

Sue Rogers said any business runs the risk of being sued, and that the fear of a lawsuit shouldn't prevent Sikeston from moving forward. "It's not just cheap utilities that make people come to town," she added.

Rogers, Michael Harris and Jerry Pullen all voted yes on the second option. Bills being considered without being read a week in advance due to an emergency situation, however, require four of the five votes. With no votes from Boyer and Marshall, the motion was defeated.

The third bill, which asked for the Charter amendment to place a 6-percent surcharge on all sales except for the wholesale sales to the contracted cities, raising $1.4 million, was never voted on as Pullen instead entered a motion to have staff and counsel draft a new ordinance for the April election which would allow the voters to select their choice of options for the surcharge.

A 4-1 vote carried the motion with Boyer entering the dissenting vote.