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Compact fees help fund city functions

A swtich to sewer surchage would leave city with new budget challenges.
Posted on June 30, 2013 at 1:00 a.m. | Updated on June 30, 2013 at 4:50 p.m.

ELKHART — Want to replace the traditional compact fee with a surcharge for commercial sewer customers outside of the city?

If that would happen, city leaders would have to figure out how to — or whether to — fund a long list of services and expenses.

Mayor Dick Moore warned last week that abandoning the compact policy in exchange for a surcharge would devastate the Greater Elkhart Fund.

That’s because state law requires that revenues from utility surcharges be returned to the utility.

The traditional compact fee, which is computed with assessed property values, has generated hundreds of thousands of dollars annually for years and represents the majority of money that flows into the Greater Elkhart Fund.

Among the areas funded with compact fees:

Trash and recycling, Lerner Theatre, Elkhart Environmental Center, New York Central Railroad Museum, the planning department, liability insurance, the Interurban Transportation system and money used to improve dangerous intersections and street sign replacement.

Moore said the fund has allowed the city to continue to provide many things that make Elkhart “a complete city” in spite of the loss of significant property tax revenues in recent years.

The fund has also been a source for incidentals. If a city truck is destroyed or a city building roof is damaged, the city often looks to the Greater Elkhart Fund.

In fact, the administration will seek to use the fund Monday, July 1, when it introduces an appropriation request to the council to spend $200,000 on annexation plans that are part of the city’s overall approach to resolving the commercial sewer compact dispute.

The council will weigh that request and plenty of other issues Monday when it meets at 7 p.m. in council chambers.

Republican councilman David Henke, who authored the surcharge proposal, concedes there would be a significant impact by shifting to a surcharge.

He said he finds it ironic that the city is concerned about those potential losses of revenue, “but cannot understand” the same plight of businesses that have faced large hikes in charges under the existing policy that Moore and the council are now working to alter.

However, Henke said the 15 percent proposal is a “starting point” and that he’d open to other ideas, including some kind of “multiplier” formula.

The city has used a “multiplier” under the old sewer service agreements in which commercial properties paid 300 percent of the city sewer rate.

Henke said he shares a different outlook in how he views the use of fees. He believes fees derived from utility services should be directed back to the utility.

Henke said the city needs to stop looking for more taxes and fees to collect and focus on business and employment growth “that would spawn a positive financial growth for the city.”

Henke added, “Lets make it clear, this is not to be a revenue stream but a coverage of cost of service. How is it that the compact money funds all the other things but is not needed to cover actual cost of utility operations?”


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