watchdog

Monday, October 15, 2007

October 15, 2007

THE ELECTION MUST BE OVER AND NOW HERE COMES THE BAD NEWS THAT THEY DID NOT WANT YOU TO KNOW BEFORE YOU VOTED!!!

It is interesting that during the recent election, I repeatedly said that the City and the MLGW were planning tax and rate increases but they would not tell the voters about them until after the election.

Well the post election reports are beginning as the recent article in the Commercial Appeal reported. They want a gas rate increase and a water increase but they are softening it with an electric rate decrease. About time.

The recent article says that the gas division is losing money again and the reason for the increase is that state law says that if you lose money in a division for three years running, you cannot borrow money with three consecutive years of net income losses.

First, it is hard to see how the MLGW, which is a monopoly, can lose money when they can charge whatever they want with their rate structure that includes a PGA (purchased gas adjustment). However, they have managed to do that in 2006 to the tune of $12 million dollars. Apparently they are losing money in 2007 but we have to take their word for that as they have monthly statements that show that but they do not publish them on their website. Also they do not publish their budgets on their website. The monthly statements and the budgets should be published immediately.

Moreover, as of the end of 2006 they showed total current assets for all three division of $675 million and total current liabilities of $369 million, an excess of $306 million. In the electric division, this excess is $197 million, in the gas division it is $70 million and in the water division it is $39 million. State law and the Memphis Charter are clear that the following statement should be implemented.

“Any surplus thereafter remaining over and above safe operating margins, shall be devoted solely to rate reduction.”

No one believes the MLGW that the net monthly increase will be only $3.26 x 420,000 customers x 12 months = $16.4 million.

Over and above the MLGW is the issue of GASB 43/45 (Government Accounting Standards Board) rules which calls on the MLGW, the City of Memphis and Shelby County Government to account for the unfunded liability of the retirees’ health care and life insurance costs. So far, the City, County and the MLGW have been paying only the annual costs and the unfunded costs are many millions more. The County has already said that it will add 22 cents to the property tax rate. The City and the MLGW have not said yet how they will fund this. There are three choices. 1) Raise taxes, 2) Cut benefits for retirees and 3) do nothing and see their bond ratings lowered.

However, there is a fourth choice and that is to cut wasteful and unneeded spending, cut expenses and cut expenditures to cronies and friends of the politicians. This is what the newly elected city council members promised. Will they follow through?

1 Comments:

  • And now there are rumblings that the Mayor is going to get a 7% raise after all!

    Add that to the 10 new appointed positions in the MPD that the Mayor is going to ask for today and you see which direction Willie's last four years are going. These things are being rammed through with the old council today because they know they can get them approved - with the new council coming in January they have to get this stuff voted on and approved NOW since they know they will not have the votes with the new council.

    Just the tip of the iceburg and no one is paying attention!!

    By Anonymous Anonymous, at 5:58 AM  

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