Council OKs adding Utilities payment to general fund

Ending months of debate, a divided City Council decided Tuesday that the millions of dollars Colorado Springs Utilities pays annually in lieu of taxes are exempt from ballot Issue 300.

At least for this year and next.

After that, a new mayor and a new council must decide for themselves, possibly turning the contentious issue into a political football before the April municipal election.

“When the new City Council comes on board next year, the charter says City Council ‘may’ appropriate surplus revenue, so they have to make that decision – independent of what we do – every single year,” said Mayor Lionel Rivera, who voted with the majority.

“We can’t bind a future City Council.”

The controversy stems from Issue 300, authored by anti-tax activist Douglas Bruce and approved by city voters last November.

The initiative calls for a phase-out of all enterprise payments to the city in eight years or less. Colorado Springs Utilities is considered a city-owned enterprise.

Earlier this year, council members asked Utilities to set aside in an escrow account one-eighth of the so-called PILT – estimated at $31.5 million for 2010 – while they figured out whether Issue 300 affected the payment.

In a city that had to turn off streetlights and take trash cans out of parks, the PILT from Utilities is a big source of revenue and affects the city’s ability to provide basic services.

A few weeks ago, the City Attorney’s Office issued an opinion that the PILT from Utilities constitutes a surplus under the city charter. The charter, essentially the city’s constitution, states that council “may” appropriate any remaining surplus from Utilities to the general fund.

Since Issue 300 amended only the city code, Rivera and other council members maintain the PILT is allowed because the city charter trumps the city code.

But the question remains: What did voters expect when they approved Issue 300?

Some say it was largely about ending the Stormwater Enterprise, which the council eliminated, although reluctantly. Others say it was also about phasing out enterprise payments to the city, including the payment from Utilities.

Councilman Bernie Herpin, who voted with the majority in the 5-4 vote, said Bruce’s campaign material didn’t mention anything but ending the “rain tax.”

Those who opposed the motion were Jan Martin, Randy Purvis, Sean Paige and Darryl Glenn.

“I can’t go back to my constituents and say I don’t have the leadership, the cojones, to stand up to Mr. Bruce and say it’s in the best interest of my constituents that we adequately fund public safety, that we do not allow our city to deteriorate further,” he said. “I’m willing to take that stand, and I’m willing to have our city attorney defend this in court if somebody wishes to challenge that. I owe that to my constituents.”