Wednesday, August 26, 2009

A solution to the city's budget woes: Have the PILOT fly at a higher altitude

City Council members Angela Hunt and Sheffie Kadane at their joint budget townhall meeting Tuesday night

I was attending the joint Angela Hunt-Sheffie Kadane budget townhall meeting last night and heard assistant city manager A.C. Gonzalez and both council members insist that the city's fiscal 2009-10 budget, as proposed by City Manager Mary Suhm, doesn't raise taxes. That's a lie. It does raise taxes. It only raises them indirectly through something called PILOT.

I've explained this before, but let me go through it one more time. Dallas Water Utilities, a City of Dallas department, is designated an Enterprise Fund which means it doesn't require city tax moneys to operate. All of its income comes via the water rates it charges its various customers. The city, through this nifty gimmick called PILOT (an acronym for Payment In Lieu of Taxes), duns Dallas Water Utilities a designated amount of money which then goes into the city's General Fund, that pool of money that comes from sales taxes, property taxes and other fees that's used to operate city government. DWU then raises its rates to recover this payment. Neat, eh?

So last night I'm sitting in the drama room at St. Thomas Aquinas School on Abrams Road listening to District 9 councilman Kadane say his No. 1 priority is finding funds to keep the city's rec centers open longer and District 14 council woman Hunt's concern that this will be the second consecutive year there's no money in the budget to slurry seal our streets, or that less money should be spent on the 2006 bond program or that she's worried about cuts to youth programs.

And I realized there was a simple answer to all this: Since the Dallas City Council insists on perpetuating the myth that PILOT is not a tax increase, why not just charge DWU more and have those funds make up the difference needed? Of course, that will mean higher water rates, but, hey, that's not like a tax increase. Or at least that's what the city maintains.

I did find it interesting, however, and it confirmed my suspicions that citizens are willing to pay for good government, that one citizen speaker at last night's meeting criticized the council for not raising the taxes needed to pay for the 2006 bond program, money voters authorized the city to appropriate. When Ms. Hunt asked for a show of hands of those agreeing with the speaker, an overwhelming majority of those present raised their hands. Of course, when it comes to our City Council, the will of the people doesn't mean a thing anyway so nothing will come of this. But I did find it interesting and I suspect Ms. Hunt found it intriguing as well.


Jeff Siegel said...
This comment has been removed by the author.
Jeff Siegel said...

Whoops.. sorry about that.. having trouble hitting the correct keys. Should have said:

What, you didn't come over and say hello?

I thought the same thing when I heard the PILOT discussion. It's double entry bookkeeping taken to the highest level, and I'm going to write about it on the Advocate blog one of these says.

My other favorite part? That Dallas, with traditionally some of the lowest water rates in the state, is raising rates to increase conservation.

colorado kool aid said...

The PILOT is meant to be what a privately owned utility would pay in taxes -- so it's not like you can set it at any level you want and maintain the idea that it is a payment in lieu of taxes. There is NOTHING remotely similar to "double entry bookkeeping" -- that is just an ignorant charge thrown out there to slap at the City government. If the water utility wasn't owned by the City of Dallas, it would pay taxes like any private corporation -- and some taxes that private utilities pay (for use of ROW, etc.). The local electric utilities are investor-owned utilities and pay taxes to the City of Dallas. This isn't really all that complicated and certainly isn't nefarious. Too bad for you government bashers and conspiracy addicts.