Officials say nothing wrong with using utility funds for salaries

Money from utility bills is going toward city employees’ healthcare and salaries, but that is not illegal, City Manager Lance Willard and Municipal Attorney Dan Blasdell said Tuesday.

The men both said the Auditor of State has never had any problems with the way the funds have operated over the years a statement that can be checked by accessing the city’s audit available online. The audit was made public last month and contained no findings for recovery.

Their statements came in response to an hour-long presentation by Councilman Bryan Blakeman, who was defending comments made on his personal website claiming that city utility customers are being taxed without their knowledge. On the site, Blakeman argues that using revenue from utilities to pay for healthcare for city employees, such as the city manager, service director and finance director, amounts to such a tax.

Those posts prompted resident Dan Bekar to ask councilmen at their last meeting to address the “rumor” that utility bills were paying for city employee salaries and healthcare. This prompted Councilman Richard McBane to respond that what Blakeman had posted “wasn’t correct.”

Bekar is running as an independent candidate for city council in the November election.

Blakeman said Tuesday he did not appreciate having his credibility “attacked” and was disappointed McBane wasn’t present at the meeting to hear his response.

Blakeman went on to defend his position by showing council a copy of the 2013 budget, referring to several line items. In the electric fund, for example, he noted $251,958 went toward employee benefits.

Aside from those figures, Blakeman asserted utility customers are paying a tax they aren’t even aware of, in the form of a kilowatt excise tax, which is not listed on their electric bill. He pointed to a line item showing the kilowatt hour excise tax as revenue in the general fund. Total projected revenue from the tax for this year is $315,000.

Willard and Blasdell said it is also not illegal that revenue from the bills are going toward a kilowatt hour excise tax. The tax was implemented as part of Senate Bill 287 in 2001, Willard said.

Finance Director Mike Harold said the tax is built into the overhead rate.

“Our electric rate is cost of electricity we purchase from AMP and we factor in the overhead basically our cost to run the department. Kilowatt tax is a usage tax, so this $315,000 that is in the budget could go up or down based on usage throughout the year,” he said.

He added the figure has increased over the last two years as usage increased.

The tax amounts to .456 for zero to 2,000 kilowatts used. Residential users typically don’t exceed 500 kilowatts, he said.

“Why this was never put in the bills, I can’t answer that,” he added.

Blasdell said that the tax has not been listed on customer bills may have to do with the fact that it is going to the general fund and is not listed as a receipt into the enterprise funds.

“But that doesn’t negate the fact that this was all audited, perfectly appropriated,” he said.

Willard said Wednesday he contacted other AMP Ohio communities and was told they do not include the tax on customer bills either.

“It’s a tax on the city, not individuals, that’s why it’s not on the utility bills,” he said.

Regarding the payment of salaries, Blasdell said Tuesday that dividing Willard, Harold, and the service director’s salaries among the utility funds is “standard practice.”

“I can cite you chapter and verse of Ohio Revised Code and our Charter” allowing that authority, he added.

He explained law allows for benefits to be paid from the fund of which employees perform a service.

Blakeman said he understood the legality, but thought it “looked bad” for the city to collect a tax without first notifying its customers.

At the end of the meeting council members, with the exception of McBane who was absent, approved including the kilowatt excise tax on customer bills. The inclusion is with regards to language only and will not change customer bills from a financial standpoint.