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ROW Fee Reduction Discussion Grows Testy-Video
Posting Date: 07/11/2012
By Barbara Ellestad
The quietest part of the Mesquite City Council meeting agenda item regarding the reduction of a three percent right-of-way (ROW) fee passed through all utility companies to local residents was during the Public Hearing portion when no one spoke for or against the action item. After that, the discussion among Council members and with City Staff grew a little testy at times at the July 10 meeting.
At Councilman Karl Gustaveson's behest, Councilman Kraig Hafen explained why he had placed it on the agenda. The action called for a one-half percent decrease in the fee each year until it is completely dissolved in six years. Approximately $500,000 is collected each year and placed in the Street Maintenance Fund.
Hafen recalled that the fee was imposed in 2005 while he was a member of the Virgin Valley Water District Board of Directors. "I was strongly against it at the time," Hafen remarked. He explained that back then Mark Wier, current Mesquite Mayor, and he fought against having the fee added to water ratepayers bills.
"Every time your power bill goes up, this fee goes up. Every time the utilities dig up a street, they put it back in the same condition. This is nothing more than a tax," Hafen remarked.
"Back in 2005, it was a 3-2 vote [to pass it] and it wasn't highly popular. My take at the time was that it was a way for the City to find revenue. Every week the Mayor and I used to joke about what it would be called the next week because it went through so many processes and names. It was a glorified way to get more tax," he added.
Hafen explained that he thought the six-year reduction period would give the City time to adjust its budget process to account for the loss of income.
Gustaveson took up the discussion saying, "I have about 20 or 30 concerns," with the fee reduction. "One of the concerns [when the fee was being implemented] was that we needed to build a street maintenance fund. Before I get into all these issues, I think this was an unusual way this was brought forward." He went on to complain that the City Staff Department heads had not been given an opportunity to vet the issue or weigh in on the effect it would have on the budget.
Gustaveson also complained that no consideration had been given to how the lost revenue would be replaced in the fund that's dedicated to street upkeep.
"There's no reason why we should put ourselves in a financial bind," by reducing the revenue, he remarked.
"Since our Staff had no chance to have a discussion on it before it was brought forward, I'm going to ask each one of them tonight" for their opinion. He first asked Debbie Cardenas, City Finance Director, about the impact on the budget.
When Councilman Geno Withelder, acting as Mayor Pro Tem, asked City Attorney Cheryl Hunt for guidance on the propriety of the Staff weighing in on the matter, Gustaveson angrily chastised Withelder for doing so.
Mayor Mark Wier had previously recused himself from the agenda item because of his private employment.
"I understand your concerns about the citizens and businesses. We're all on the same page," Cardenas began. Saying that she was looking at it from a financial standpoint, "passing this bill tonight is putting the cart before the horse. We haven't had a chance to look at the impact of passing this bill moving forward. The City has to come up with a way to replace that funding."
Giving a quick review of the numbers, Cardenas explained that "over six years the impact will be $1,811,000" that the City could lose in the street maintenance fund. "I know we've had severe cutbacks over the last few years. In order to keep the General Fund whole, we have not funded the Technology Review and Replacement Fund at $150,000 a year, the Vehicle Replacement Fund at $630,000 a year, or the Facility Maintenance Fund at $200,000 a year. The Senior Fund is important to the City and we fund that at $100,000 a year."
Cardenas explained that the Street Maintenance Fund used to be in the General Fund and was funded at $200,000 a year. She added that the Street Maintenance funding was separated from
the General Fund several years ago.
"I'm also concerned about the C-Tax," Cardenas continued. The City receives about 44 percent of its total budget each year from the State's distribution of the C-Tax, or Consolidated Tax. The State Legislature is reviewing the formula used to distribute those funds. "There is a strong possibility that we could lose up to a million dollars a year."
She lamented that some of the funding the City has received from various government agencies is not a reliable flow. "This is one source [of money] that comes directly to the City. It's a fixed revenue that I can count on as a Finance Director. I would like the opportunity to research it more but that's your decision."
Bill Tanner, who as Director of Public Works administers the street maintenance spending, had his turn at explaining why he didn't think the reduction and eventual elimination of the three percent fee was a good idea.
He explained that "over a period of ten years, from 2003 to 2012, we had income from gas tax of $2,197,000. Our right-of-way fee was $3,500,000. We received $2 million in grants from RTC (Regional Transportation Commission) and the America Recovery and Reinvestment Act. We've had $8,800,000 coming into the fund. We've spent $5,350,000 on the reconstruction of roads."
Tanner added that when the Street Maintenance Fund was moved into a separate account, it received about $250,000 less per year in funding. The account balance stands at about$3,500,000. He explained that one of the reasons the balance is so high is because he deferred several projects from 2011 to this year and next that are valued at about $1.9 million.
After completing planned projects through 2014, Tanner estimates the balance will be reduced to approximately $860,000. He explained that high-dollar maintenance of Mesquite Blvd is not included in the projects.
"To find replacement funding is going to be difficult," Tanner remarked.
City Manager Andy Barton commented that, "we're concerned about anything that's going to reduce revenue to the City."
"This idea is just not right for where we are economically," Gustaveson said. He mentioned that next year the City will enter contract negotiations with all of its employee unions that could have a significant impact on the budget. "It would be foolhardy on our part to start eliminating funds now."
He also questioned where the money would come from to fund the newly proposed public-private economic development function.
"This is probably the fairest way to come up with funds. Everyone pays a little bit," Gustaveson remarked. "I think it's an insult [to Staff] that we're going to come in and take a half million dollars from them without consulting with them first."
"I don't have a problem delaying this," Hafen said. "I find it interesting that we're concerned about vetting things from Staff. Mr. [Kurt] Sawyer, back when he was Interim City Manager, talked about taking $250,000 in one lump sum out of this fund [to help pay for the proposed indoor sports/event center]. There's was no vetting from Staff members then. We didn't seem to have a concern about that."
Councilman George Rapson agreed in part with Gustaveson's concerns first clarifying that only people in Mesquite, and not outside the City limits, were paying the fee. "I inherently don't like taxes. Street infrastructure is a part of why people move here. I don't like this tax and I'm ready to get rid of it. But I don't think this is the time. We have too many uncertainties with income streams."
Councilman Al Litman weighed in with "I tend to agree with Staff on this. We need an additional analysis of this issue. Maybe wait until the C-Tax issue has been settled and then come back with a couple different scenarios."
Hafen eventually made a motion to defer the issue until Staff had an opportunity to further analyze the financial impact of the fee reduction and then re-introduce the change for possible action. "If this is going to be the nail in the coffin for the City of Mesquite, I think we have bigger problems than this. If we haven't gotten things turned around in the next six years, we have some major challenges ahead."
After the motion was seconded, Hafen, Rapson, and Litman voted in favor and Gustaveson voted against it.
Posted Date: 07/11/2012 I admire Mr. Hafen. A councilmans job is to work for the people and that's what he does. Whether or not this passed is immaterial. Hafen saw a unjustified tax and tried to get rid of it. Thats what the "for the people" means. Good job, Kraig. By: Vic M
Posted Date: 07/11/2012 Gustaveson never met a tax he didn't like. He is a left over from the old Holecheck spend, spend, spend administration. He needs this ROW fee for his "tent" project. I also notice he's getting a little grumpy and rude up there. By: Brent
Posted Date: 07/11/2012 so ROW fees can be used for anything I thought they were to be used for street maintainence. Lets see where they have been spent in the last 6 years. onn what projects. The ROW fees must be a seperate line item By: donna
Posted Date: 07/11/2012 People continually complain about taxes and pretend like these two president candidates will do something about it. That won't happen. But here is a local guy who really wants to do something about unfair taxes and nobody stands up for him. You should be ashamed. Stand up for Hafen, make your voice heard. Where is the ridiculous tea party now? You want taxes reduced, call Gustaveson and the others now. By: Ken
Posted Date: 07/11/2012 Unless the final proposal includes mandatory and proportional reductions in our utility bills, this will be nothing more than a decrease in revenue for the City and an increase in profits for the utilities. The Mayor was right to recuse himself from the discussion. By: Andrew Newcom
Posted Date: 07/11/2012 Hafen hit it right on the head. A few months ago staff was going to spend millions on building a soccer field for Utah kids now they say we wouldn't have enough money to fix the streets. Gee, what's wrong with this picture? Let's see who votes for the soccer project now! By: Sandra
Posted Date: 07/11/2012 Who is wagging the tail? Is the council our leaders? Lets ask staff if they want a pay raise next year?? By: ted miller
Posted Date: 07/11/2012 Ask the staff first? What do you EXPECT them to say? This was a courageous move by Hafen. Also, don't be misled into believing this tax is paid for by the utilities -- two of our three utilities (VVWD, OPD) are non-profit publicly owned, so WE are paying the fees anyway! Just a cute way to double tax us. By: Devon
Posted Date: 07/11/2012 How can Gustaveson possibly justify advocating spending millions on a recreational project when he worries about not having enough money for maintenance? I don't get it. Hafen is right, this was just another sneaky tax that will never go away. By: Jerry
Posted Date: 07/11/2012 Like ken said people need to stop whining about national taxes, Obamacare taxes and gas taxes when we have a chance right here in our own backyard to eliminate a tax and our council won't do it. Mesquite should be outraged. Sky high salaries and pie in the sky projects rule Mesquite. Hafen is dead right and we should support him. And good question, where is the Mesquite Tea Party? I thought they were against taxes. Not a peep from them. Disgusting. By: Marcie
Posted Date: 07/11/2012 Kraig is right. When he ran for office he told us he would do just this reduce taxes and cut spending. I admire him for doing what he promised he would do in his campaign cut taxes and reduce spending. Kraig you can count on the Taxed Enough Already of Mesquite for support. By: Rick Crain
Posted Date: 07/11/2012 Hats off to Hafen for keeping his word and trying to do the right thing. The council should be telling staff what to do, not the other way around. It is an unfair tax and not necessary. I am disappointed that Rapson did not support Hafen and finally understand that the city spends too much. Time to get rid of Sawyer and others that are not needed. He made his money, go back to Utah and stay there. Hafen is a hero! By: bobbiethompson
Posted Date: 07/11/2012 Not many councilment will stand up and say get rid of a tax. Thanks Mr. hafen By: Becca
Posted Date: 07/11/2012 Congrats Kraig, great job and shame on the Tea Party for not be there for public comment to support him. T.P is always late with excuses and no action. Go thing we got Hafen. By: Paul
Posted Date: 07/11/2012 Thank You, Thank You, Thank You to Al and Karl for not letting these tea party idiots destroy our city. Taxes are required to operate a city’s services. The city government has already been slashed to dangerous levels. Our city will never recover if we let it deteriorate further. Thanks for keeping the sneaky government haters from sliding in another blow to our city without proper deliberation. By: Justsayin2
Posted Date: 07/11/2012 Gustaveson shuuld resign and let someone on the staff take his place, I'm sure they will support lower taxes. It time to go when you pull kind of stunt. Please do the right thing. By: Grace
Posted Date: 07/11/2012 Kraig and Mark, so pleased with what you have done to bring good government to Mesquite, We had no idea this tax existed until you and Mark Weir named it properly as a TAX, from the beginning.
Kraig, your comparison to Sawyers proposal to remove $250.000 from this fund for the Sports Events Center without consulting with City Staff is a Classic. Thanks for standing up for taxpayers.
Don Muse By: Don Muse
Posted Date: 07/11/2012 Gustaveson and Withelder need to retire and just go away.
these guys are denmentia driven and are frankly a joke!
these 2 relics from the queen susan era need to be put out to pasture
please just go away ,2 old dudes!
and thanks to the mayor and the other councilmen for keeping some sanity here By: real change dude
Posted Date: 07/11/2012 Thanks Kraig for trying. We will never know what will happen if we never try. By: Nancy