Water rate ‘discrimination’ stirs debate

By Jim Saunders
News Service of Florida

In an issue that could affect cities across the state, Florida House members started moving forward with a proposal aimed at preventing municipalities from charging higher water and sewer rates to customers who live outside city boundaries.

The proposal (HB 777), sponsored by Rep. Robbie Brackett, R-Vero Beach, comes after similar debates last year about municipal utilities, including electric utilities.

Supporters of making changes argue that utility customers who live outside municipal boundaries can face higher costs — without being able to vote for city leaders who set rates and make other utility decisions.

“I think to boil this down to what Rep. Brackett is trying to do is to eliminate discrimination between ratepayers who are living inside a municipality and the ones that are not inside the municipality and (are) covered by this same provider of those particular services,” Rep. Chuck Clemons, R-Newberry, said before the House Energy, Communications & Cybersecurity Subcommittee voted 12-3 to approve the bill last Wednesday.

But other lawmakers pointed to a series of factors that complicate the issue, including bonds that have been issued to finance water and sewer projects and agreements between cities for providing the services.

As an example, Louis Rotundo, a lobbyist for Altamonte Springs, said the Central Florida city also provides water to Maitland, Winter Park, Eatonville and Longwood. He said the other local governments made decisions that it was cheaper to buy water from Altamonte Springs than to provide the services themselves.

“This is a decision that should be left to local governments to work out amongst themselves,” Rotundo said.

Under state law, municipalities can reach agreements with other local governments or landowners for providing water and sewer services. They are able to collect surcharges from customers in areas outside the municipal boundaries or can set separate rates, according to a House staff analysis.

Brackett, a former mayor of Vero Beach, wants to change that so that customers would see the same rates, whether they are inside or outside municipal boundaries.

The House staff analysis said a 2014 study indicated about 250 municipalities provided water service, while about 220 provided sewer service. The study also found that about 140 provided services to customers outside their boundaries.

An underlying issue in the debate about municipal utilities over the past year has been whether people outside municipal boundaries are paying higher rates to subsidize other types of city services. Lawmakers seeking changes have likened the situation to “taxation without representation.”

But opponents of Brackett’s bill raised the possibility that requiring all customers to pay the same rates could have the opposite effect — with people in municipalities subsidizing services outside city boundaries.

“We don’t want to create inequities by trying to fix an inequity,” said Rep. Dotie Joseph, a North Miami Democrat who voted against Brackett’s bill.

The highest-profile issue last year involving municipal utilities centered on the Gainesville area. Lawmakers created the Gainesville Regional Utilities Authority to replace the longstanding Gainesville Regional Utilities agency. Lawmakers gave Gov. Ron DeSantis power to appoint the authority’s board members, after Gainesville Regional Utilities had been under control of the city commission.