Aug 19


Hidden taxes on our utility bills have escalated $12.3 million since 2009-10 to a proposed $32.1 million in 2014-15.  This amount is now 1/5 of the City’s General Fund revenue and costs the average family of four an extra $500 over the actual cost of their utilities this year.  Obviously, those with modest incomes are least able to pay these “transfers” to the General Fund that are used for purposes totally unrelated to the utility departments.

The ways these taxes disguised as franchise and payment in lieu of taxes (PILOT) are calculated differently for the LP&L electric utility and all other utility departments.  The franchise fee of 5% on gross receipts sends 3% to the General Fund and 2% to the Gateway Fund.  The PILOT fee (called an electric tax on the new bills) is based on 1% of gross receipts and also goes to the General Fund. The electric taxes are finally being itemized on your bills.

The City is charging us franchise fees of 6% (twice the 3% LP&L transfers to the General Fund) on Water, Wastewater, Solid Waste and Storm Water bills.  The PILOT fees on these are calculated by charging property taxes on the estimated property value of each department’s assets.  As projects are finished, these increased “valuations” generate a lot more revenue as will a proposed 2.3 cent increase in the property tax rate to 52.74 cents per hundred dollars on private property.  NONE of these are itemized on bills.

These calculations may seem complicated, but City leaders don’t want you to realize that every rate increase and property tax rate hike results in a huge utility tax windfall adding substantially more revenue to the General Fund without it showing up as a tax increase.

The total revenue from all sources this year is estimated to be $714.4 million. Total revenue has increased $394.3 million since 2003-04 (which averages over $39 million more each year).   This should have been more than enough to pay for basic City services and maintenance of facilities and streets and pay down our huge debt without adding even more hidden taxes and property taxes.

After checking with 5 Texas cities near our size, we found that none of them rip off their ratepayers like this at all.  Lubbock citizens must insist that these dishonest hidden taxes be phased out and be itemized until then on our utility bills so they can be deducted from income taxes.