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Dave Olson, Published November 19 2010

Moorhead city, public service transfer funds

In 2011, Moorhead Public Service is expected to shift approximately $6.7 million from its electric division and $320,000 from its water division directly to Moorhead city coffers.

The “transfer,” as it is called, is one reason the city of Moorhead doesn’t expect to raise property taxes next year.

But the question of how much the city should take each year is a sensitive one between city and MPS officials.

“It’s a balancing act that’s gone on for a long time,” Mayor Mark Voxland said.

“Basically, part of what we’re using the transfer for the last many years has been a way of reducing property taxes and still keeping our electric utilities competitive with everybody in the region,” Voxland said.

Currently, Moorhead Public Service makes four types of transfers to the city from its electric and water divisions.

The largest, about $5 million, goes from the electric division to the city’s general fund.

The city charter limits the general fund transfer at 20 percent of the electric division’s gross revenues. In recent years, the amount transferred to the general fund has averaged about 15 percent of gross revenues.

At times, MPS officials have made it clear they don’t think the utility gets the credit or consideration it deserves when it comes to the transfer.

At a joint meeting of the City Council and Moorhead Public Service Commission late last year, MPS President Ken Norman said both entities had to be sensitive to their respective needs.

“We’re not a piggy bank,” Norman said at a time when the city was set to increase the utility transfer by about $500,000.

Infrastructure needs

City officials did not plan to ask for an increase in the transfer in 2011. But it is likely to grow by at least $100,000 anyway, due to a proposed 4 percent increase in electric rates and the fact that portions of the transfer are based on a set percentage of the utility’s gross revenue.

Moorhead Public Service says the bump in electric rates is necessary to pay for capital improvements like:

The increase is also intended to help rebuild MPS reserves to levels officials feel will better prepare the utility to deal with unexpected issues like ice storms that can damage power lines.

The utility is in negotiations regarding potential employee pay increases for 2011, but no funds have so far been set aside for that purpose.

In 2010, MPS employees received scheduled step increases, but no additional money was budgeted for raises.

City of Moorhead union workers received pay raises in recent years, but non-union workers received no pay increases of any kind in 2009 or 2010.

The city of Moorhead is looking to give all employees a 1 percent pay increase in 2011.

Community giving

At a recent public hearing on the proposed electric rate increase, MPS officials heard from City Council member Diane Wray Williams, who said some of her constituents were unhappy with the commission’s decision to give $20,000 to the Moorhead Youth Hockey Association to help sponsor a Hockey Day Minnesota event in February.

The commission also has budgeted $20,000 in 2011 that would go toward a “defiant garden” project proposed for the city’s old power plant.

Norman said a final decision has not been made as to whether MPS will contribute money toward a defiant garden – an art project that uses sculpture and landscaping to beautify derelict industrial sites – but he said there is a practical reason to do so.

It would be one way, he said, to clean up an already rough-looking area that will only worsen after the power plant is shut down permanently next year.

MPS officials say the utility gives back to the community in many ways, including student scholarships and tens of thousands spent on assisting businesses that want to improve their energy efficiency.

When it comes to the MPS rate increase, it would be wrong to construe the need for additional funds as a sign of poor management, according to Norman.

“We are, in fact, managing our budget and doing a damn good job of it,” he said. “People should be happy we’re able to transfer $6.7 million directly over to the city of Moorhead to subsidize its operations.”

Talking it out

MPS transfers will be the subject of a meeting today between City Council members and MPS commissioners, who are appointed by the council.

Norman said one thing likely to be discussed is the wording of a note that Moorhead Public Service would like placed in customer bills explaining how much of a customer’s utility payment ultimately goes to the city of Moorhead for non-utility related things.

He said discussions in the past have included talk of making the transfer to the general fund more predictable by setting a fixed amount that would be the same every year.

Readers can reach Forum reporter Dave Olson at (701) 241-5555