Saturday, September 19, 2009

Oh, the irony!

For decades, we've listened to politicians in the Toledo area tell us how terrible our electric and gas suppliers are. They're overcharging, we're told. We have the highest utility rates in the entire state, they say. These are evil companies who are too greedy to give us lower rates, they bemoan.

But when one of those 'terrible, evil, greedy' companies comes through with some grant money - $3.2 million - that can help save the city and erase almost half of the 2009 deficit?

What then? Will those same politicians refuse to take the money that was obtained by 'overcharging' the residents? I doubt it!

They'll probably justify it by saying 'some good' is coming from the high rates. Of course, that overlooks the point that the 'good' came from the rate payers, but is going to the government. But that's how most liberals think it should be, so that wouldn't be much of surprise.

There's actually more to this story than meets the eye, though. The 'grant' is in exchange for a six-year extension of the contract nine jurisdictions have with FirstEnergy Solutions to provide service within those municipalities. Following deregulation, several communities - including Lucas County - joined together to aggregate their buying power in order to obtain lower rates for customers. The Northwest Ohio Aggregation Coalition has been successful in negotiating lower rates over the years, and this contract is no different.

But it's still extremely ironic that the recipient of the ire of politicians, especially in election years, is now somewhat of a savior when it comes to Toledo's budget deficit.

And talk about timing! Toledoans on Tuesday rejected a ballot measure that would raid the Capital Improvements Fund in order to balance the general fund deficit. If that measure had been approved and the city got this grant money, their budget problems would pretty much have been over. Now, though, council and the mayor will have to continue to reduce spending - which is what they should have been doing in the first place - unless they take the easy way out and decide to raise taxes through various 'revenue enhancements.'

But even if the tax switch had been approved and the grant money received, it would only address this year's problem. Many of the concessions agreed to in the union contracts are for 2009 only. The reduction in the amount the city 'picks up' for PERS will end beginning in January - putting the city back into the position of paying for the employer and the employee contributions to that retirement program. Those PERS pickups are a large part of what makes the union contracts unsustainable over time - as we've all seen over the last several years.

But instead of addressing the long-term issues of the city's financial situation - the spending that just doesn't end - council and the mayor look to short-term solutions and one-time payments to save them.

Oh, the irony of having to depend upon your 'enemy' for your 'salvation.'


Tim Higgins said...


I wondered why no one seemed to be asking about the timely role of the utility companies in all of this. I was likewise sickened with the apparent glee in Carty's voice as he announced the grant, apparently willing to take credit for squeezing our money out of these evil companies in spite of the fact that he was one of the biggest accusers in the past.

As for the budget, you have to ask yourself how we can expect better. Carty's team is in charge of union negotiations and they are gone in 3 months. Council is in re-election mode and is not going to make a union mad. Voters are apathetic and content to return the same names to the ballot and the power.

Get ready Toledo! 2010 is likely to be a year of tax increase and service decrease; and you will have no one to blame but yourselves.

Mad Jack said...

I don't think so, Tim. More like tax increase, government increase, regulation increase, bureaucratic complexity increase... okay, service decrease.

You know, I read this article over several times and I really and truly do not understand any of it. I worked at the Davis-Besse Nuclear Power Station and I can tell you that DB is one big paper generator and is one of the worst mistakes ever made in the Toledo area. And, lease anyone think otherwise, I'm all in favor of nuclear power. Given what a complete screw up DB is, the rest of the company can't be all that far behind, yet somehow we have all this mysterious grant money floating around, and somehow the city of Toledo manages to snag a bunch of it. Where did the money come from? Windfall profits or something? Why is Toledo getting the money?

Nope. I just don't get it. Oh well.

Hooda Thunkit (Dave Zawodny) said...

The $3.2 Million is a very cheap price to pay to lock Toledo in as a customer for 6-years.

From here it looks exactly like a huge bear trap, and we're headed right for it. . .

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