Several members of the Vero Beach City Council are sounding increasing hopeful of concluding a sale of Vero Electric to Florida Power and Light, perhaps as soon as April, 2018. Given their growing optimism over the proposed power deal, it is puzzling why City officials are preparing a 2017-2018 fiscal year budget that does not account for the financial impacts of the sale.
Equally perplexing is the Council’s direction to Staff to develop a 2017-2018 budget that maintains current employment levels, does not reduce the quality of municipal services, provides for capital projects, while also avoiding a tax increase. Given this approach, if the power sale is indeed imminent, a financial crisis for the City is brewing. They only question is whether this coming crisis is by default or by design.
Currently, the City transfers from the electric fund to the general fund $5.4 million a year. That money is considered as operating profit on the utility. It helps pay for municipal services such as police protection, parks maintenance, lifeguards, and recreation programs. An additional $1.8 million in administrative and overhead costs are paid by the electric utility. Of those expenses, officials have estimated slightly less than $700,000 can actually be cut once the electric system is sold.
The bottom line, then, is that the sale of Vero Electric will leave the City needing to raise revenues or cut expenses some $6.6 million a year. That is more than the City now receives annually in property tax revenues.
A sale of Vero Electric half way through the 2017-2018 fiscal year will leave the City some $3.3 million short. Further, given that the property tax rate cannot be change mid year, the City will have no option but to drastically cut expenses. And where will those cuts be made? They will come in the form of layoffs. More than 80% of general fund spending goes to salaries and other benefits, which means there is simply no way to cut some $3 million out of a $20 million budget without laying of scores off employees, and thus cutting services.
It is hard to see how the current approach to developing the 2017-2018 budget is anything other than a deliberate attempt to sow the seeds of a financial crisis intended to force the City to turn over police protections and eventually other services to the County.
For many who have pushed hardest to hand Vero Electric over to FPL, the power sale has never been about electric rates, but about putting the City in a position where it will have no choice but to be absorbed by the County. With so-called “unified” government, there then will be no City of Vero Beach Charter or City Code protecting public lands, limiting high-rise developments, and preventing the scourge of short-term rentals.
If the voters of Vero Beach are willing to accept these consequences for a 10%-15% savings on their electric bill, then so be it. But they might as well go into this with their heads up and there eyes open. As they say, there is no such thing as a free lunch.