The Gainesville Regional Utilities (GRU) Authority said Wednesday that the City Commission’s ballot initiative on the authority’s existence is illegal and voted to inform the Supervisor of Elections of their position.
The vote passed unanimously in one of the first actions by the new GRU Authority since Gov. Ron DeSantis appointed five members earlier this month.
Board member Craig Carter proposed the motion, which authorizes the GRU attorney, in conjunction with the city attorney, to give the proper documents to the Supervisor of Elections concerning the utility’s position.
The GRU Authority’s attorneys already presented their arguments against the ballot initiative to the City Commission, but the city decided to push ahead with the backing of city attorney Dan Nee.
The ballot initiative would strike Section 7 from the City Charter, eliminating the GRU Authority and reverting control of the utility to the City Commission.
The GRU Authority also discussed its fiscal year 2024-2025 budget that would begin Oct. 1 and run through Sept. 30, 2025. A primary focus of that discussion was the annual money transfer the utility sends to the general government, known as the general services contribution (GSC).
Because the GRU Authority has yet to make a final decision on the GSC, Gainesville’s general government side has presented two budget scenarios during planning sessions.
The previous GRU Authority stalemated on multiple votes concerning whether to eliminate the GSC for the next fiscal year. Legislators cited high debt at GRU coupled with a high GSC and high rates as a reason for taking control of the utility away from the City Commission.
GRU Authority Chair Ed Bielarski reiterated on Wednesday that the utility sent $68 million more to Gainesville’s general government from 2018 to 2023 than the utility earned.
Mark Benton, GRU’s director of accounting and finance, confirmed the figures. He said staff pulled the numbers since 2002 and found that GRU sent 95% of its earnings to the Gainesville general government during that period.
Benton also compared GRU’s current money transfer to other municipal utilities.
In 2023, the transfer represented 7.6% of GRU’s operating revenue. With the reduction to a $15.3 million GSC for the current fiscal year, the percentage fell to 3.3%.
In 2022, Jacksonville’s money transfer compared with the operating revenue sat at 6.4%, Tallahassee at 10.3%, Lakeland at 10.6% and Orlando at 10.8%.
The GSC reduction also dropped the percentage of general government’s budget funded by the money transfer. The GSC funded around 25% of the city of Gainesville’s general government in recent years. For the current fiscal year, the percentage is 9.8%.
“Did [the GSC reduction] have an impact? Yes. Is it out of line with some of our other peers? Probably. But to look at it from only that perspective is myopic. There are reasons that those changes have been made,” Benton said.
He added that people on both sides of the issue can point to empirical numbers, like the percentage of operating revenue, to back their position. But Benton said the whole picture needs to be evaluated.
GRU has just over $1.8 billion in debt.
Benton compared GRU’s outstanding debt to its operating revenue to create a ratio and then compared that ratio to other utilities. For fiscal year 2023, GRU has a ratio of 4.1 debt to operating revenue. Other A+ bond rated utilities have a median ratio of 0.55.
Jacksonville, Orlando, Lakeland and Tallahassee all have a ratio of 1.51 or lower.
Board member Eric Lawson said he wants to move forward with GRU’s plan to reduce debt and not worry about recouping money sent to the Gainesville general government in the past.
“When you compare where [the GSC] is today compared to other organizations, it is lower and it is appropriately lower because of the debt load that we cover,” Lawson said.
Carter said he would like to see GRU recoup some of the $68 million more than revenue sent to the general government in the past but over a span of many years. He said he doesn’t want to eliminate the GSC just to have the Gainesville City Commission raise property taxes on residents.
Several members said the city failed to make serious budget cuts for the current fiscal year, relying instead on a 16.9% increase in the property tax rate.
Bielarski pushed for the elimination of the GSC in 2025. He said he can’t justify raising rates while sending $15.3 million to the general government on top of all the funds sent in the past.
Board member David Haslam said he also wants to keep rates even for the next fiscal year.
GRU General Manager Tony Cunningham said staff will return with GSC reduction options to recoup the $68 million over time along with information on how a franchise fee would work if the city sought one.
Bielarski said he’d also like to see reductions in GRU’s current budget, including $20 million in capital expenditures and $5 million in operating expenses.
The budget presented by GRU on Wednesday totaled $450 million, and 31% of the budget consisted of debt payments.
The proposal would raise rates in keeping with a schedule passed by the City Commission in 2021. However, the presentation also noted that the average GRU bill is $15 dollars cheaper today than in October 2023 thanks to reductions in fuel pass through costs.
GRU’s debt reduction plan relies on rate increases in the coming years, and Bielarski said he knows the utility can’t operate forever with a flat rate. However, he said he wanted to attempt to stay flat for 2025.
The next budget meetings are scheduled for June 12 and 26, with the potential of another meeting added in June. GRU is required to submit a budget to the Gainesville City Commission by July 1, though the commission lacks any oversight power.
This is an odd sort of operation.
In very simple terms, GRU charged its customers and transferred large sums to the city while it (GRU) was increasingly, and regularly, going further in debt. Yet the city didn’t have any responsibility for any of the debt?
That sounds a lot like racketeering.
This is a good summary of the nuts and bolts of the meeting. Of note, Mr. Lawson said the GRU budget as proposed was reasonable and he was in favor of it and not addressing a years-old prior transfer. Mr. Carter was interested in recouping that transfer over ten years but also spoke favorably of the budget. They each offered reasonable input. But it would seem that the majority have made up their minds and are disinterested in the complexity of utility finances and the necessity of long term planning. So, the future of GRU may rest with a scooter company owner, a lacrosse coach and a man who is bitter about being fired from GRU and losing the mayoral election. Hardly a stellar group.
It is interesting that the new authority board jumped right on challenging the ballot referendum scheduled for Nov 5 that would allow voters to decide whether to keep the authority or allow elected officials to govern the public utility, GRU. It would seem they fear they would lose the election. In 2018 voters defeated the idea of a 3rd party group running the utility by 60%. The new authority does not want to allow voters to decide. I say let democracy decide. Let the referendum go on the ballot. Let the voters decide.
but only voters in the city limits will have a say. should be all GRU Customers. the city commissioners have also proved they are incompetent in decisions regarding GRU,
I feel bad that the city will not get the same amount of funds each year they have been getting but they decided on the lousy deal that put us in debt so they earned it. Let’s be honest though $20M doesn’t make much difference on 1.8 B debt. To claw back the $68M is crazy talk as the money was freely given at the time. As to folks outside Gainesville not getting votes Indianapolis has a city/county government that works that Gainesville should review. Who will start building a beltway or road system(shows we are not aligned) for all the sub-divisions west of i-75 that work in the city without a cohesive government plan?
So if you are in debt and can only make minimal payments, the answer is to keep borrowing?? The sad part of this Utility to City $$ transfer is that the citizens are the ones whose pockets this money is coming from. Spend, Spend, Spend
It’s our (Gainesville residents) utility. It was our water supply that, in 1905, helped persuade the move of UF from Lake City to Gainesville by offering land, money and an agreement to “furnish water to the university without charge.” Thanks to the “taking” engineered by the thieves, comedians, criminals and contrarians in our state’s legislative and executive branches,, we no longer control our own utility through our elected city commission. Now, Soviet Russia-style, the control comes from the top. If this question actually does reach the ballot, I’ll certainly vote to right this serious wrong.
yet, later when they had the chance they switched to another Utility provider for their campus needs. 😉
The basic problem in Gainesville is that the citizens do not elect commissioners who operate the city in an adult manner.Further the city has a history of shouting down and canceling voices trying to pint out the destructive inevitable result of city policies. The city and its officials destroyed the utility financially. Thank goodness the legislature rescued it.
I recently moved to the area from Lee Co. and lived with the political corruption of DeSantis and company and the results. I know nothing about how a public utility should be run. I do know it should not be run by political hacks appointed by the Governor like the water districts, Universities, the Dept. of Health the environmental Departments. I would far prefer these “directors and trustees” be chosen by lot than whatever scum that has risen to the surface in Tallehassee.
You should learn the history of what went on in Gainesville. The city proved itself incapable of running the GRU incurring billions in debt at the utility on wasted worthless “Green” agendas. And the citizens of Gainesville played the leading role. Electing time and again officials who drove the GRU over the financial cliff and worthless huge expenditures that produce no value. Whatever you think of state govt they act with some degree of competence compared to what goes on in this city.
I worked at GRU for 17 years. It’s a wonderful place to work, despite all the slings and arrows they’ve suffered. I can only hope that the Authority won’t slash and burn the budget to the detriment of GRU’s reliability. The generation fleet hasn’t lasted for 50 years by deferring maintenance, which is what will happen when the budget is slashed.