Six percent of property tax receipts will go to pay for streetlights and streetlight maintenance, up from 4 percent now, if a bill approved in committee Tuesday becomes law. Water and Power Authority Executive Director Hugo Hodge Jr. said the measure was greatly appreciated, but was too variable and not enough to cover actual costs, suggesting a streetlight surcharge would work better.
Sen. Nereida "Nellie" Rivera-O’Reilly, the bill’s sponsor, said the old formula of 4 percent of property tax was not bringing in enough to pay the cash-strapped utility what the street lights cost to run, forcing it to defer maintenance, costing more in the long run.
“The amount owed by the government to WAPA [has] continued to rise. We knew that the increase to 6 percent would not be sufficient to cover all of the streetlights but we felt that it would be a step in the right direction,” O’Reilly told Finance Committee members as she introduced the measure.
In his testimony, Hodge recounted how the current property tax formula came to be. Historically, he said, the Department of Public Works billed the government monthly for streetlights and the government paid the bill. Then, in 2002, the Legislature passed Act 6486, giving WAPA responsibility for the lights and appropriated millions of dollars for the purpose, he said.
"But the appropriation was never funded," so WAPA petitioned the Public Services Commission to add a surcharge to customers’ bills, Hodge said, adding that the surcharge was in effect until 2005, when the Legislature passed Act 6755, which "effectively stopped requiring ratepayers to pay" for streetlights.
That legislative act also set aside 2 percent of property tax for streetlights and 2 percent for water system infrastructure, he said.
In 2009 the Legislature increased the 2 percent for streetlights to 4 percent, eliminating the subsidy for water system infrastructure but increasing the amount for streetlights. This brought in $6.7 million in 2013, but the cost of street lighting was more than $10 million, according to Hodge.
At present, WAPA is owed more than $9.6 million for streetlights and the funds set aside from property taxes "are clearly insufficient," he said. Hodge said it will get worse next year because the government has been collecting two years of property tax each of the last three years and that stops in 2015.
One year’s property taxes receipts currently come to about $56 million, so after 2015, the proposed law should increase streetlight payments by about $1.05 million to around $3.4 million per year, which is well below what is needed, Hodge said. Property tax collection also varies from year to year and is not directly connected to the cost of streetlights, so there will always be a mismatch, he said.
As a result, "a surcharge to pay for street-lighting is the best way to pay for the service in the territory," Hodge said.
Tax Assessor Ira Mills said that carving out a larger portion of property taxes for streetlights helps fund the streetlights but also means taking more than $1 million out of government coffers at a time when the territory is trying to figure out how to close a $40 million budget deficit.
Because utility bills are so high, because so many people are struggling and because it is an election year, "the idea of even mentioning a surcharge is scary," but it needs to be discussed, said Sen. Craig Barshinger.
"You are talking about something that is going to be very small … we are not talking about hundreds of dollars. We are talking about dollars," Hodge said, adding that if the average customer uses 400 kilowatts per month, the additional surcharge would be about $4 per year.
Several senators commented that if WAPA does not get the money, it may have to defer maintenance, which will reduce efficiency, ultimately costing ratepayers money too.
No action was taken regarding a surcharge. The committee approved the bill to increase the proportion of property taxes set aside for streetlights without dissent, sending it on for further consideration in the Rules and Judiciary Committee.
Voting yea were O’Reilly, Sens. Judi Buckley, Terrence "Positive" Nelson, Donald Cole and Clifford Graham. Sen. Clarence Payne was absent. Sen. Craig Barshinger was present but is not a member of this committee. The committee also voted to subpoena the financial records of the V.I. Carnival Committee going back to 2010. There was no debate or discussion of the motion made by O’Reilly. All members present voted for the subpoena, with Payne and Cole absent.
Editor’s Note: The members of the committee have been corrected in this article.
