Power Struggle: Florida bill sparks debate over municipal utility funds

by | Mar 22, 2023

  • Florida House panel approves bill (HB 1331) to restrict money transfers from municipal electric utilities to city general funds, citing concerns of “taxation without representation.”
  • The Florida Municipal Electric Association (FMEA) opposes the bill, arguing cities should manage utility funds as they see fit and warning of potential negative impacts on city budgets and quality of life.
  • The bill, which includes a formula to cap money transfers, moves to the next step in the legislative process, with potential effects on utility rates and city budgets remaining a topic of debate.

A Florida House panel approved a bill on Tuesday that aims to restrict the amount of money that cities can siphon out of their municipal electric utilities to the city’s general funds. Supporters of the bill liken the practice to “taxation without representation.”

“I don’t think the utilities should be able to transfer anything,” said Rep. Mike Caruso, expressing concerns cities siphoning off profits to pay expenses generally lead to higher electric bills for customers, many of whom reside outside city boundaries and can’t even vote for city officials who are spending the money.

The House Energy, Communications & Cybersecurity Subcommittee voted 17-1 in favor of the bill (HB 1331), filed by Rep. Demi Busatta Cabrera, R-Coral Gables.

But the Florida Municipal Electric Association (FMEA), which represents a number of city-owned electric companies across the state, argues that cities should have the right to manage their utility funds as they see fit. Tallahassee Mayor John Dailey warned the House panel that the proposal could lead to a $10 million “hit” to the city’s general fund, potentially necessitating an increase in property-tax millage rates. Rep. Bruce Antone, D-Orlando, cast the lone dissenting vote, as money from the Orlando Utilities Commission is transferred to the city of Orlando general fund.

The bill would establish a formula to cap the amount of money that can be transferred, linking the caps to rates of “return on equity” determined by the Florida Public Service Commission for private utilities. Caps would be reduced based on the percentage of municipal utility customers living outside city boundaries.

In a press release, the FMEA condemned the proposed legislation, stating that it would “hurt municipal utility communities and their residents.” The association claimed that limiting general fund transfers would infringe upon cities’ rights to earn a reasonable return on their utility investments, potentially raising costs and reducing quality of life for Floridians.

Ryan Matthews, a lobbyist for the FMEA, requested that lawmakers exempt rural communities from the transfer cap, arguing that they depend heavily on utility revenues to fund services due to their smaller tax bases.

The bill’s passage through the subcommittee marks a first step in the legislative process. Its potential effects on municipal utility rates and city budgets will continue to be a topic of debate as it progresses through the Florida Legislature.


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