SB 1110 would prevent cities from transferring utilities revenues into their municipal…
“This is the biggest, potentially most damaging piece of legislation we’ve ever seen,” Jeff Coyle, assistant city manager for San Antonio, said of Senate Bill 1110 during an Intergovernmental Relations meeting on Wednesday.
The bill, introduced in the Texas Senate on Feb. 22, prohibits Texas cities from transferring revenue from municipal utilities to the city’s general fund, according to a presentation from Government Affairs Director Sally Basurto. SB 1110 comes during an “onslaught” of bills filed before the deadline on March 10 and is one of nearly 1,000 San Antonio Government Affairs are closely monitoring.
“As introduced, it would hit our general fund revenue percentages requiring drastic cuts to city services including public safety,” Basurto told city officials, including several members of the city council. “It would also undo our municipal utility model.”
Basurto added that the bill as currently written impacts water utilities, like the San Antonio Water System, in addition to energy utilities like CPS Energy.
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“Once the bill was filed, about a week and a half ago, we immediately did outreach to our entire House and State delegation,” Basurto said Wednesday morning. “City Manager Erik Walsh and CFO Ben Gorzell met with 10 of the 13 House and Senate members and staff to immediately flag our concerns.”
Both Coyle and Basurto said the bill was originally aimed at Austin’s energy utility. Basurto noted that Charles Schwertner, R-Georgetown, the bill’s sponsor, read a comment from a former Austin city councilperson who said energy rates would not have risen if the city had foregone or reduced its general fund transfer.
Initial conversations between San Antonio officials and Schwertner indicated that the senator didn’t realize the broader implications of his bill, and that his own district of Georgetown has a general transfer and had a meeting with him about that last week. Schwertner is the chair of the Senate Business and Commerce committee, to which the bill may eventually get referred, Coyle added.
The city felt that the bill was important enough that Gorzell and Walsh cleared their schedules the day after the city learned of the bill and headed to Austin for conversations with area senators and representatives.
As written, SB 1110 is a statewide bill and affects San Antonio in critical ways. The general transfer from the up to 14 percent revenue made by CPS is more than 25 percent of San Antonio’s general budget, according to Coyle, about $400 million.
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“I don’t think I’m being terribly dramatic when I say it could be crippling not to have that revenue,” Councilwoman Melissa Cabello Havrda, who represents the sixth district, said during the meeting. “It’s disheartening to know that the entire state, and of course our city, could be impacted by an offhand comment from a council member of a different city.”
The 14 percent represents what would otherwise be paid by a private utility in property taxes, Coyle noted. A private utility would pay the city property taxes and right of way taxes for electrical lines, with the rest of revenue going toward shareholders. The 14 percent combines those things and is CPS’s return to the city, with rates being up to 14 percent, with past years being closer to 12 and 13.
“If all this went away, and we had a private utility here, the cost to the rate payer wouldn’t go away, they’d just be paying it to a private company, where those revenues would go to shareholders or Wall Street or wherever, instead its invested in our community,” Coyle said.
Officials are busy generating a list of organizations in the business community that would be willing to help educate Schwertner on the potential impact if the bill were to get further in the process. So far, those organizations include the Texas Association of Business and Texas Association of Builders, and there is a long list of opponents in the business community to Schwertner’s bill, due to the economic development aspect of it.
“This is one of those moments where we call on the Greater Chamber to step up and help us fight this fight,” Manny Palaez, co-chair of Intergovernmental Relations, said Wednesday. “This is an attack on our ability to do economic development.”
shepard.price@express-news.net