Sunday, September 24, 2006

Austin lucky to have electric utility transfer

For at least a decade, large employers and downtown business interests have campaigned against Austin's "transfer" of profits from the city-owned electric utility to the city's "general fund," and apparently those interests are preparing to make another run.

The Statesman's Kate Alexander today tries to portray the City of Austin's "transfer" of profits from the electric utility, Austin Energy, as some nefarious plot to unfairly tax residents ("Is Austin's use of utility fees appropriate?," Sept. 24). While I've not always been a fan of the way the City runs the utility, the argument against transferring profits to the general fund is a red herring.

Bottom line, Austin finds itself in a unique position. First, it still owns its own electric utility and so is immune to the market vagaries that plague other Texas cities. Profits from TXU in Dallas go to investors - profits from Austin Energy go to property tax relief. Which is preferable?

More importantly, as the center of state government and with the University of Texas here, Austin finds itself with more non-taxable central city real estate than any other Texas city. (Tax abatements given to several large employers exacerbate the problem.) Much prime real estate that in other cities would be a source of tax revenue in Austin is off the tax rolls. That means that higher utility fees, especially in central business district, help make up for the complete lack of local taxes paid by state government to the city.

Some of the large high-tech manufacturers like AMD and Motorolla would be the biggest beneficiaries of eliminating the "transfer," while average taxpayers who'd have to make up the difference would be the losers.

Austin's lucky to own it's own electric utility and we should maximize the public benefit from this valuable resource. Reinvesting utility profits in the city isn't some scam - it's one of the most important benefits from the city owning its own electric utility in the first place.

Cities who get their electricity from private companies can only wish they had the luxury of deciding where profits from consumer utility payments will be spent.

UPDATE: Reporter Kate Alexander responds: "Just one clarification: the story focused on costs paid by the enterprise departments on top of the transfer."


Mike said...

The tax-free land argument is good in isolation, but I'm not sure it bolsters this particular point. To me, like so many foolish decisions Capital Metro makes, this is a PR matter - if the utility was spending the same amount of money on urban forestry / solar panels / white roofs / other at least tangentially-electric-related worthy causes, they'd be bulletproof here.

Gritsforbreakfast said...

I don't think they need to spend it on energy related stuff to be "bulletproof"? Why? Are TXU investors required to spend their profits on energy related stuff? Of course not. Austin Energy's profits should be similarly unencumbered, and spent for the good of the whole city.