• The City of Gainesville filed a lawsuit challenging a new state law (HB 1645) that shifts control of Gainesville Regional Utilities to a governor-appointed board, arguing it violates the city’s constitutional rights over its utility system.
• The new state law was enacted to address concerns over rural residents’ lack of representation in utility spending decisions made by city leaders.
• Lawmakers passed HB 1645 after questioning large transfers of utility dollars into city budgets to help pay for city-only programs.

In an escalating dispute between the city of Gainesville and the state of Florida, the city has filed a lawsuit to challenge a new state law that will shift control of the Gainesville Regional Utilities system from the city to a board appointed by the governor on October 1, 2023. The city argues that the law could potentially impact $1.8 billion in bonds and other debt that have been issued to pay for utility projects, possibly damaging the city’s credit rating.

But the law, HB 1645, was passed by lawmakers and signed by Governor Ron DeSantis to address concerns over rural residents who live outside the city limits and cannot vote for or against the city leaders who spend the utility’s dollars on city projects while ignoring rural customers. Lawmakers pointed to transfers of funding from the utility to the city’s budget, to help make ends meet, which lawmakers said is a clear cut case of taxation without representation.

In the lawsuit, though, the city claims the new bill is a constitutional violation over control of its utility system. The lawsuit also alleges that the changes imposed by the law would strip elected officials of their ability to control the electric system, contravening ownership rights and violating bond covenants.

Adding to the complexity of the dispute is the ongoing federal-court challenge filed by a non-profit group and Alachua County residents who argue that the law would improperly restrict speech rights.

The Gainesville Regional Utilities provides electric, natural gas, telecommunications, water, and sewer services to city residents, but also to surrounding rural areas. Previously, the rates were set by the city commission, but the new law granted authority to the governor-appointed board.

Gainesville isn’t the only city that spends their city-owned utility dollars on city projects, even though many customers can’t vote in city elections. The outcome of the dispute could have far-reaching implications for municipal governance, utility systems, and the rights of residents, not just in Gainesville, but across the state and potentially the country.