The decision by the volunteer board of directors of the Jamestown Board of Public Utilities to kick in $420,000 for the city's general fund next year deserves more public discussion. The money comes from the profits of the BPU's electric and the water divisions. The extra money helped Jamestown City Council bring the property tax levy increase for next year down from about 6 percent to less than 1 percent.
The BPU has always given the city money in place of the property taxes the publicly owned utility would pay if it were a private business. For all of the BPU divisions, the payment to the city is roughly $3.6 million.
But as recounted below, sharing outright profits with the city is almost a foreign idea. In fact, three of nine members of the BPU governing board disagreed with the flat-out payment to the city and so voted against the legislation at the meeting last week.
However, with Jamestown dangerously close to exceeding its constitutional taxing limit the city is looking for new sources of revenue. The fiscally healthy, city-owned BPU is a strong contender. We don't have estimates for this year, but in 2011 the electric division had a profit of $3.9 million in its $38.2 million budget. With all of the division budgets totaling $53.9 million, the BPU ended 2011 with a profit of $5.3 million.
We do not mean to suggest the BPU has the capacity to become a cash cow for the city. Even if the BPU did, it should not become that. The electric, water, wastewater, solid waste and district heating divisions run on equipment and facilities that are expensive to maintain and replace. Money must be set aside every year for that and so prudent management claims a good portion of the profits for future capital needs.
Just as important, the city has to be able to operate as efficiently as possible. The extra BPU money will save property owners from paying higher property taxes next year, but it is the spending that has to be controlled in the long term.
The questions remain: Should the city lay claim, as the law allows, to some of the BPU's yearly profits to ease the tax burden on property owners? If yes, how much? If not, then what?
The topic deserves discussion in public - by public officials and city residents alike.