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Utility fee increases gnaw at taxpayers’ pocketbooks

 

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Stormwater, solid waste,“capital improvement fee” among rate hikes

By Roger McCredie-  They’re fees, not taxes.  The City of Asheville wants to make that perfectly clear.  Especially since it just raised a whole bunch of them.

Beginning this month, Asheville residents are seeing yet another increase in the total amounts of their combined utilities statements – those bimonthly charges that some old-timers still quaintly call “the water bill.”

These days household water consumption is only one billing item.  Other charges making up the city’s portion of a utilities statement include fees for capital improvement, stormwater and solid waste disposal, as well as a flat $6.00 “base fee.”

Water usage is billed by volume.  The price is $3.99 per 100 cubic feet (ccf) of water used according to meter readings. For a typical residential account, this actual water usage may account for as little as 20 to 25 per cent of a total utility bill.

The capital improvement fee was enacted to finance “long term water system improvements.” Effective July 1 this fee was raised from $3.97 to $4.03 per month, or $8.06 per bill, for subscribers who use 5/8” meters.  That would include most residential users.  But customers with irrigation systems, requiring larger meters, pay proportionally more – from $4.62 per month for those with ¾” meters all the way to $1,649.22 per month for industrial users with 10” meters.

Then there’s the solid waste fee.  The newly enacted rate is $14.00 per month, or $28.00 per statement, which the city says is necessary to offset service costs.  According to the city, “In 2013, the cost to provide solid waste service to Asheville residents was $5.9M. The total [solid waste] fees collected from residents in the same year generated $1.28M.”  It is not clear how the city suddenly came to realize it had been operating its solid waste program at a loss of nearly 5:1.

There has also been a five per cent increase in stormwater fees, which are calculated on an individual user basis using a complex formula that assesses water runoff from impervious surfaces on customers’ properties.  Stubbornly referred to as “the rain tax” by disgruntled water users, the stormwater fee system has been criticized since its introduction in 2006, with harshest detractors alleging that it is nothing more than a slush fund which the city draws on as needed.

The city generally responds to the frequently-asked question, “Where did this stormwater fee come from?” with the stock answer, “It’s a federal mandate.” However, the only “federal mandate” driving Asheville’s stormwater program is the decades-old Clean Water Act, with its broad goals and provisions.  In the late 1980’s, this act morphed into an arrangement called the Clean Water State Revolving Fund (CWSRF), a federal “partnership arrangement” which in fact placed most of the responsibility for water policing on state governments.  In turn most state governments, including North Carolina’s, played kick-the-can-down-the-road and tossed implementation of the CWSRF’s provisions into the laps of towns and cities.

Thus the boots-on-the-ground methodology for financing and maintaining a stormwater program was created and is carried out entirely by the City of Asheville.  And the stormwater fees revenue stream has been closely scrutinized, almost from its inception. According to the City, it pays not only for repairing and maintaining surfaces and infrastructure impacted by rainwater but for a whole spectrum of services and programs, from street sweeping and drain inspection to “educational outreach” and “floodplain information.”

But earlier this year prominent local businessman Mike Summey challenged that statement by saying, “Asheville’s Storm Water (or rain) Tax is nothing more than another of the smoke and mirrors ways the city extracts money from its citizens under false pretenses. To my knowledge there is no ‘mandate’ for a rain tax, only an authorization to implement one.”

It’s not a tax, says the city.  A tax is a percentage of a transaction that is used for the express purpose of raising revenue for things that do not have to be related to the item being taxed.  A fee is actually reimbursement for direct costs of something that either has been done or will be done. Economists have pointed out that this distinction lends itself to being blurred so that collected moneys often go for projects unrelated to their stated purpose, making them in fact taxes and not fees.

“A tax has the primary purpose of raising revenue,” said Joseph Henchman, Vice President of Legal Projects for the Tax Foundation, and author of an exhaustive study on the distinction. “By contrast, a fee recoups the cost of providing a service from a beneficiary.”

Henchman’s report found that two of the fifty states still had not adopted those definitions as a basis for collecting revenue:  Oregon and North Carolina.

But the insistence on making the fee/tax distinction was not lost on another Asheville entrepreneur, former Vice Mayor Chris Peterson, when he addressed City Manager Gary Jackson at a recent city council meeting.

“On November 16 of last year I called Gary Jackson – again—and said, ‘Gary you’re seven million dollars in the hole. Gary said, ‘Well we’re not gonna raise taxes.’ That was pretty clever, Gary,” Peterson said. “You didn’t raise taxes, you raised fees and charges. You’ve got a $6 million [2016-17] stormwater budget, yet you only plan to spend $600,000. Your numbers don’t add up. This is a Ponzi scheme and it’s getting ready to blow up.”

At that point, Mayor Esther Manheimer had police escort Peterson from the meeting.

City utility billing is actually handled by the Metropolitan Sewerage District (MSD) which adds its own charges to the bimonthly statements.

 

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