Author: multiple Friends of SPUC
Since when is saving for the future a bad thing?
Why does Shakopee Public Utilities have so much in reserves? The answer is actually quite simple. The Commission plans for the future.
Customer demand for water and electricity continues to grow. And that leads to the capital improvement projects required to keep up with that demand. The 2019 Capital Improvement Projects report discusses those projects. It clearly states how much the Commission budgets for those projects over the next five years.
Do you save for the future?
People save for their children’s college educations. They save so that they have reserves in case they have hardships in the future. They even save so they can go on vacations. If you paid off all your debt – mortgage, credit cards, student loans, everything – wouldn’t that be a good thing? Wouldn’t that mean you were managing your money well?
It’s no different for SPUC.
It’s hard to argue otherwise, but when it comes to Shakopee Public Utilities, some argue that the fact that SPUC in effect has “savings” means it’s mismanaged. But it’s quite the opposite. Shakopee Public Utilities has wisely saved for the future – and is currently debt-free. The organization collects the funds necessary for capital improvement projects as fees/charges to new customers. If the City takes over, the likely outcome will be these funds will be used for other purposes. These other projects may not necessarily be things the taxpayers want. But that won’t matter. Because the City will already have the money to fund them – from the SPU reserves.
Without the reserves, when new utilities infrastructure is needed, there won’t be funds to cover it, and it will be paid for by bonding – which is essentially borrowing. This creates debt. As bonds for capital improvement projects are approved, customers will be required to make higher payments to offset the bonded/borrowed amount. This in turn results in higher payments in lieu of taxes (PILOT) fees to the City because for every dollar of increased fees, the city takes its percentage. Currently, it’s 4.4% in PILOT for both water and electric. And if the City has its way, it’ll be 23.77% of every dollar ratepayers pay for their water usage!
Don’t let the City use SPU reserves as if it’s a line of credit.
This will result in a “win-win” for the City. But it’s “lose-lose” for the ratepayers and taxpayers who will be paying higher fees to cover the debt. Vote NO and save SPUC.