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Erik Burgess, Published December 02 2013

Public utility, Moorhead could see legal dispute over transfer payments

MOORHEAD – If the publicly owned utility here refuses to pay the annual revenue transfer amount set by the city, attorneys would have to settle the dispute.

As 2014 budgets near completion, there is still a discrepancy between the city’s budget and that of Moorhead Public Service. The city is asking for a $250,000 increase to the transfer it receives each year from MPS revenue, bringing that payment up to about $8 million. Utility leaders haven’t budgeted for that increase and argue they don’t have to.

At Monday night’s City Council meeting, Councilman Mark Altenburg asked City Manager Michael Redlinger: If the city budgets for the revenue transfer increase, would MPS “in the end” have to pay for it?

“We would work through the attorneys to see that payment,” Redlinger said.

MPS President Ken Norman has contended that the utility only has to fully pay for the transfer if it has the revenue available after covering its own bills. Utility commissioners have also said they don’t want to raise next year’s transfer another $250,000 because that would require a 0.9 percent bump to electric rates, which are already proposed to go up by 3.5 percent next year.

Altenburg said MPS commissioners are appointed by the council, and it appears to him that the commissioners “want to relish in conflict rather than find resolution.”

“It does distress me when we’re playing games with a week to go, when the council could simply increase the transfer and collect that revenue,” he said.

The city might have found a way to limit the impact of a higher revenue transfer, though.

MPS is preparing to tear down the old Moorhead Power Plant, and Moorhead could offer the utility $250,000 from the city’s flood mitigation bonds to help cover the cost of demolition, said Finance Director Wanda Wagner. The $1.08 million demolition was bid out in October and should be done this winter.

The city would still ask for a $250,000 increase to the revenue transfer, but with the funds given to help with the demolition, it would essentially be a zero net effect on the MPS budget, Wagner said.

The council on Monday also discussed eliminating a $199,000 shortfall in the city’s 2014 operating budget. The answer will likely be twofold: a 5 percent cut to discretionary funds and juggling funds from the annual MPS transfer.

About $1.7 million of next year’s proposed $8 million transfer goes into a city capital improvement fund, but the city could redirect $41,000 of that into its general fund.

The 5 percent cuts to discretionary funds include taking $2,803 from repair and maintenance, $7,812 from travel, training and conference, $13,880 from supplies, $16,798 from motor fuels and $20,577 in miscellaneous cuts.

Four council members said they support the budget – Altenburg, Mike Hulett, Nancy Otto and Steve Gehrtz. Councilwoman Brenda Elmer said she was “disappointed” with city staff because they didn’t provide her more information about cuts to the city’s travel budget.

Wagner and Redlinger have maintained that more than 5 percent cuts on those funds would not be feasible. Altenburg asked staff to be “very judicious” with those cuts.

“I would hate to see our snow plow drivers not getting the best training possible,” he said.

The city is set to finalize its budget next Monday. Taxes levied by the city are set to go up by about $39 on the median-value home of $139,900. MPS is set to finalize its rates on Dec. 17.

Readers can reach Forum reporter

Erik Burgess at (701) 241-5518