For a little over two years and six months now, the City of Salem and its citizens have been reeling from the double whammy of a failed utility billing system and the rising cost of electricity. Make that a triple whammy with a dose of COVID-19.
The utility can got kicked down the road and now it’s time for somebody to pay the price. That price should not be paid solely by the city’s utility customers. The city’s slow-motion response to utility billing issues that started in November 2019 makes it culpable. Over the past three years its fund balances have dropped by $2.4 million. Utility revenue was down $2.7 million during that stretch. This fiscal year that ends June 30 looks a little better, but not near enough to get out of that kind of red ink.
The city of Salem in November raised electric rates by 13.8%. At the most recent utility committee meeting, the group discussed ways to make up for a 34% increase in the cost the city pays for electric. If the committee and aldermen – who have the final say – do nothing, customers get stuck with a 34% automatic increase due to city policy.
The city should not pass the total increase along to customers in any shape or form.
While many other communities dipped into reserves to soften the huge increases in the cost of electricity and not pass all of them along to their customers, Salem saw its reserves drastically reduced due in large part to the billing issues. The combined electric and reserve fund was $1.4 million in June of 2019. Twenty-three days from today (Tuesday) those two funds are expected to have a balance of $177,000. For Salem, there are little reserves left to dip into. We have already dipped our way to where we are today.
Asking customers to cut their budgets for a mess they had nothing to do with is plain nonsense. It is also making a lot of people angry. Gas is over $4.50 a gallon in much of Missouri and still on the rise. We paid $14 for a package of chicken wings the other day. Talk to the cattleman who is paying over $5 for diesel. Talk to the small business owner about how a utility increase of 34% will impact his bottom line.
The city needs to pay for some or maybe all of this in the form of budget cuts. Our elected and volunteer leaders who will make their recommendations and cast their votes on the utility increase – and there will certainly be one – are sympathetic to the plight of their customers. I have no doubt about that.
There are contributing factors to the problems caused by the billing system, foremost being a cold snap in February 2021 that sent the cost of electric charged to the city skyrocketing. There was also COVID-19, which forced the city to back off of its cutoff policy and allow people to run up utility bills without paying. Some people needed the help and some were milking the system but, either way, city collections suffered. It was, financially speaking for the city, the perfect storm.
But the customers are running out of any kind of sympathy, understanding or patience for a city that has in many ways failed its community. And now the city wants us to pay the price and bail it out?
What kind of budget cuts is the city going to make? Are they willing to share in the pain? What plan does it have to see that this doesn’t keep happening? What kind of accountability has there been for these missteps that are costing us so much now?
The current crop of elected city officials is all relatively new to this leadership game. By now they are certainly aware of the mountain of problems facing us. In some ways they have the luxury of not getting the blame for the situation we are in. But they also have the burden of getting us out of it. Hopefully they are willing for the city to share in this financial burden.
This isn’t just about a 34% increase of electric rates or a “usage fee” if you want to mask it as that, it is about confidence and impacting the future of the community. Like much of rural America, we are taking it on the chin right now when it comes to everything from healthcare to high-speed internet access and the cost of everything.
Things like 34% electric increases have an impact on our pocketbooks, but they also have an impact on our psyche. Leadership can try to pass the big increase off as something beyond its control, but that’s just half the story. A half-truth. The other half of the story is that our city failed miserably to install a billing system and did not do enough, fast enough, to fix it when they found out it was broken. Then they played with the numbers to make us think it really wasn’t that bad.
It really is that bad. Now we all know. So to be fair, both the city and its customers need to share in the cost. The pain. Our newly elected and inexperienced leaders need to come up with a solution really quickly. The automatic, 34% increase goes into effect July 1, and though we have known this day was coming for months and months now, nobody yet has a fair and just plan on the table.
