BALANCE SHEET BLOG – HOLLYWOOD, FL


User Fees: Hidden Tax
April 23, 2011, 10:03 PM
Filed under: Budget, Taxes, Water-Sewer-Sanitation

April 23, 2011

Fees for City Services:  Hidden Tax

We’ve recently learned that the City has used for other purposes many millions of dollars Hollywood residents have been paying for water, sewer, and curbside trash pickup and recycling. In short, we are over-paying for these services and the excess money is being used to balance the city budget.

For example, in each of the three most recent fiscal years, over-charging for water and sewer allowed the City to take over $6.7 million annually out of the Public Utilities Enterprise Fund, placing it instead in the General Fund. Fees we paid for curbside trash pickup and recycling have also been removed from the Sanitation Enterprise Fund to beef up the General Fund, just under $1.5 million this year, and more in prior years

We’ve been thinking about the use of the Enterprise Funds as a means to subsidize and balance the City budget.  First, what is an enterprise fund?  In government accounting, a fund that provides services to the public for a fee that makes the entity self-supporting.  Hollywood has five such funds:  public utilities, sanitation, stormwater, golf, and parking.

We understand that Florida law does not prohibit such transfers from Enterprise Funds. But we ask ourselves if this is a prudent and logical budgeting method, is it fair, and finally, is it ethical? We conclude that the answer to all these questions is “no.”

We are burdening water users, for example, with an inflated cost in order to camouflage the real true financial straits of the city. This means financially struggling homeowners may have their water shut off for failure to pay what amounts to an invisible tax that inflates the cost of the water they use. This situation not only violates the basic principle of open, transparent government, but creates an unfair and hidden method of taxation.

Political expediency can no longer be tolerated in lieu of factual accounting. Inflation of the water and sanitation costs to accommodate budget failures is something we also cannot tolerate.

The City’s revenues face additional erosion for the next several years because of the economic climate. This is not good news. But we believe that citizens are entitled to a factual statement of the true budget shortfall and how much of an increase in the millage rate along with cuts in employee benefits will accommodate revenues for at least the next three years.

Thousands of other US cities have similar if not worse situations. The economic downturn just hastened the inevitable. This is not shameful, but it will be so if city management and our elected officials continue to ignore the inevitable.

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