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Proposed utility surcharge called unfair to Hernando customers

BROOKSVILLE — The Hernando County Commission's vote to raise the property tax rate got most of the attention earlier this week, but there was something else in the budget-balancing package that caught Paul Sullivan's eye.

Sullivan, a former county commissioner himself, was curious about a $1,165,203 revenue increase proposed when county budget manager George Zoettlein made his presentation to the commission Tuesday. The money was to come from something county officials called a "return on investment surcharge'' on the Utilities Department budget.

The surcharge would pay the county back for its investments in the utility system, thus helping out the county's general fund. For the county's water and sewer customers, it would mean an increase in their bills.

"My question is how is that fair when you as a water and sewer customer will pay this surcharge, and if you're on a well and a septic you don't,'' Sullivan said. "It means that some of us are being taxed twice.''

As Sullivan talked to more county officials about the concept, he grew more opposed and sought on Thursday to talk with county commissioners and candidates for the commission.

During his time with the county, Sullivan said, there were several discussions about siphoning money away from the utilities budget and into the county's cash-strapped general fund. But the utilities operation is a stand-alone enterprise fund, which collects dollars to operate independently.

"It's just not fair,'' Sullivan said. "In the long run, it's the customer who ends up paying through the nose.''

All three commissioners who voted for the budget-balancing package presented by Zoettlein said on Thursday that they were not fans of the surcharge idea.

Commissioner Jeff Stabins said Sullivan was correct in his concerns about fairness.

Only 75 percent of the homes and businesses in Hernando County are connected to the county utilities system, but the general fund affects everyone. Stabins said he wanted to vote in favor of the compromise on balancing the budget, but would prefer finding a way to do it without the surcharge.

"If there was a better way of getting the pie baked without robbing Peter to pay Paul, I would support it,'' he said.

Commissioner John Druzbick said property taxes aren't totally fair either, not when 13,000 properties in the county pay no tax at all, yet receive services. Thousands more pay only a small amount in tax.

Druzbick said inclusion of the surcharge for utilities is one of the ideas the county is tossing around, but "I'm not really happy about it.''

Commissioners had to settle on several details of the budget by Tuesday so Zoettlein could present commissioners with a proposed balanced budget by Sunday, the mandated date. On July 24, the commission will discuss its options further, then set a tentative tax rate and budget. The rate and budget won't be finalized until after public hearings in September.

Commissioner Dave Russell said he didn't think he would support actually going through with the surcharge, and he noted that Zoettlein was already looking for other ways to cut another million dollars from the 2012-13 budget to replace the surcharge.

For Russell, one of the considerations is that the county might soon have to raise rates for utility customers in order to meet bond obligations for ongoing projects. The surcharge would just add to the burden.

It was Russell who first suggested several weeks ago that the county look into the value of its utility system, with an eye toward privatization. That idea stirred up some negative feedback, especially among Utilities Department staff members.

Since then, County Administrator Len Sossamon, Zoettlein and the county's legal staff have been looking at other alternatives. Russell said those conversations will continue as the commission tries to deal with its revenue shortfall.

"It's all part of the philosophy of leaving no stone unturned,'' he said.

Barbara Behrendt can be reached at behrendt@tampabay.com or (352) 848-1434.

Proposed utility surcharge called unfair to Hernando customers 07/12/12 [Last modified: Thursday, July 12, 2012 8:09pm]
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