Consider the issues when you vote
To the editor:
There were three letters that appeared in the last two editions of the Breeze that piqued my interest.
One by Richard C. Perry raised many salient points, particularly in the first paragraph. The only thing I would take issue with is of a semantic nature. Mr. Perry states, “Cape Coral does not have a budget, it has a spending plan” A more accurate statement would be “Cape Coral has a plan to spend – to spend more.” Mr. Perry then goes into some detail about what he correctly denominates as the tax break lie, i.e., lowering the millage rate while generating more revenue with the infamous three-legged milking stool, which gave us the fire assessment and the public service tax.
The second letter of note was penned by Jim Fitzgerald who correctly noted that District 2 Candidate John M. Carioscia’s claim of $183 million in savings through the pension reform applies mostly to new hires and the affect, if not changed by future union contract negotiations, will not have a substantial budget impact for many, many years. It is obvious that the pension system is badly in need of reform – as an example Mr. Carioscia retired from his City job with a pension after only 3-1/2 years. Granted, it is not one of the more plush City pensions, but is enough to cover a monthly automobile payment. Imagine, three and one-half years on the payroll to get taxpayers to fund a new car payment for the rest of his life. Mr. Fitzgerald next noted that Mr. Carioscia when running for office four years ago stated he did not support either the fire assessment or the public service tax. However, when elected, his “nay” quickly became an “aye.”
The third letter I wish to comment on was written by John Carioscia himself on Oct. 2. It is noteworthy for its misinformation, prevarications and arrant falsehoods. Where to begin?
Mr. Fitzgerald already addressed the pension reform claims; Mr. Perry adequately explained the false revenue diversification claim – taxpayers are still the cows being milked with the three-legged stool. I will focus on some of the other claims made in Mr. Carioscia’s letter. One is that we now have 100 fewer city employees then when he was sworn in four years ago. This claim is so transparently false as to be an insult to all but the most ill-informed. Page 12 of the FY 2012 adopted budget lists 1,276 positions, while the FY 2015 amended budget lists 1,596. That is 320 more (a 20 percent increase) not a decrease of 100, as Mr. Carioscia would have you believe. Proposed increases in the FY 2016 budget will bring that number to 1,652, a 30 percent increase. Perhaps, Mr. Carioscia’s disregard of the facts is due to a long tutelage in his formative years in Chicago, or perhaps he is just a victim of the art of number manipulation. Remember his deer-in-theheadlights look during a March 2015 Council meeting when staff informed him he didn’t know what he was talking about on the budget numbers and where funds were?
There are other incorrect statements such as having water rates “locked in for 10 years.” If one reads Resolution 35-13, which set the current rate, it will be seen that section 2 states that in September of each year a revenue and expenditures report associated with water production will be reviewed by Council and rates may be revised by Council. Does that sound like a 10-year rate lock to you? There are other dubious claims that space does not permit discussion of. However, he raises a more important issue that requires comment.
That one is the hostile take-over of Lee County Electric Co-op, LCEC. First, keep in mind, that LCEC, as a co-op, means that we, the customers, have an ownership position. This is a point I will come back to later. The City is proposing that they buy LCEC from us with our own (tax) money and have the City run it. Why would we want to let them do that? Has LCEC been a bad performer charging high rates? How many business functions do you know of that government performs more efficiently and/or less expensively than the private sector? Yet reducing costs is the reason proffered by the City for the take-over. If the City was sincere in reducing electric costs, they could do so immediately by eliminating the 3 percent franchise fee and the 7 percent public service tax – a 10 percent immediate reduction.
Can the City do better than LCEC? Of the 56 electric utilities in the state, LCEC’s rates hover around the 7th or 8th lowest. They have had three rate decreases in the past 18 months and do not anticipate any increase in 2016. That will make eight consecutive years without any rate increases! Can the City make that claim?
LCEC purchases power and distributes it to its customers. According to the City’s 2010 consultant study this purchased power comprises about 75 percent of LCEC’s operating cost, thus leaving only 25 percent of the overhead for the city to affect increased efficiencies needed to achieve rate reduction. How good has the city been at doing that? Remember, they wish to raise city salaries from the 50th to the 75th percentile and they are asking you to vote council members a 50 percent raise. More importantly, the city comprises approximately 43 percent of LCEC’s customer base. With that much smaller of a customer base and about 6 percent less demand for power, what bargaining power will the city have with the power producers when they go to negotiate contracts? How much will be lost in economy of scale with a 60 percent smaller operation?
Let us look at the cost of the city doing “due diligence.” This has already cost us thousands and will most likely run into millions. Could not this money be better spent on roads and sidewalks? Remember above, when I stated we, the customers, own LCEC? This fact has been recognized by state law. Florida Statutes Section 425.22 requires that a 2/3 majority of LCEC’s customers/owners approve any sale. That is 2/3 of its customers/owners not 2/3 of those voting or 2/3 of those in Cape Coral. Even if 100 percent of Cape Coral customers voted and even if 100 percent voted yes, that is still only 43 percent of the total customer/owner base. What is the likelihood of that happening? The City is aware of this and is willing to hire outside legal counsel and spend thousands of tax dollars litigating Section 425.22. Additionally, you can anticipate the city spending thousands litigating the purchase price. Also, remember, as you are a customer/owner of LCEC you can expect to pay for LCEC’s litigation costs as well as the City’s legal bill.
Now, where will the half billion plus (a likely purchase price) come from to pay for buying LCEC? The city will have to borrow it and you will have to pay the bond holders their principal and interest. How will you do that? Through higher rates and/or taxes! The city’s consultant in its proforma (with a purchase price of $425M) has indicated that the debt service will be so great that to make a profit, rates will have to be raised. Will you be looking forward to the 8th highest – not the 8th lowest -electric rates? Remember, the city is also adding 10 percent on top of your electric bill in the form of taxes.
Make no mistake about it. This is not about reducing your electric costs. It is about power, no pun intended. This intrusion into the private sector will mean more power to the city and bigger and more expensive government. Controlling your electric supply will give them the ability to raise rates and hire hundreds of more employees. The city government is already the second largest voting bloc. This will just make government bigger and more powerful not leaner, more efficient or more economical.
What about Mr. Carioscia’s promise to put this issue to a referendum? He misled us with his stance on the fire assessment and the public service tax. Do you trust him on this? Just look at all the misleading statements in his letter. Does that inspire confidence in his word? I think not.
Do not neglect you responsibility to vote and be sure to vote NO on the Council pay raise.
William P. Deile
Cape Coral