We’re deep into the primary campaigning season and New Albany voters are preparing to elect a mayor and nine council members.
Quite a few of the incumbents, including Mayor Jeff “M” Gahan, are boasting about the state of our sewer system (Gahan is also the paid president of the city-owned municipal utility).
But it turns out that our elected officials have resumed an illegal shell game with taxpayer money once again being used to disguise the true state of the utility’s finances.
Just four years ago I asked voters in New Albany’s Fifth Council District to elect me. During that campaign, I pleaded with Gahan to promise to end that subsidy. He denied it was illegal and declined to make such a pledge.
I had thought the chicanery had finally ended when I read last year that the subsidy had been removed. But just to make sure, I perused the city’s 2015 budget. There, to my astonishment, was yet another transfer of $570,000 from the income tax fund (EDIT) to the sewer utility.
I have written at length in the past about the illegality of this transfer. To be brief, while a city in Indiana can own and operate a municipal utility, the finances of that utility must be completely separated from other city funds. That is, the utility must stand on its own, without subsidies of any kind.
With this budget year, Jeff Gahan has in 11 budget years (as a councilman and as mayor) approved more than $10 million in transfers from city taxes to prop up the utility.
One might be of the opinion that using tax dollars to fortify the sewers is a good thing, but none of us are entitled to an opinion on this matter. State law is extremely clear. It’s illegal. (It happens to be illegal in Louisville, too, under a different state’s laws – ref: MSD.)
This misfeasance on the part of the mayor and council subjects the utility itself to the jeopardy of a taxpayer lawsuit to recover these millions of dollars.
However, illegality has become normal in New Albany. It’s not just the law-breaking that New Albany voters need to be aware of as they go to the polls. This transfer is possibly the single dumbest way to divert tax money and demonstrates innumeracy and financial incompetence on the part of the mayor and his advisors.
Let’s do a little simple arithmetic. It takes a few steps to show that this is a foolish way to spend.
The local income tax is split equally between Floyd County and the City of New Albany. It taxes the incomes of people who work here and/or who live here. If you work outside the county, you may also pay income taxes there, but adjustments level out.
Today, New Albany takes in just less than $3 million each year from the income tax. Over the 12 years Gahan has been an officeholder, more than $10 million dollars has been illegally diverted. This year, they’ve allocated slightly less than 20% of all EDIT collections to be able to say the city utility is “financially sound.”
Every dime sent to the sewer utillity is a dime that could have been used to pave roads, hire more cops, or address any of the crying needs of New Albany. If you work, here’s roughly how much of what you paid has been going to keep sewer rates artificially low:
Let’s take a relatively low number like $30,000. That household pays about $65 a year so that sewer rates can be subsidized. The largest subsidies, of course, go to the largest users – industries and orthers who use large amounts of water each month.
Assuming they use 3 units each month, their monthly bill is about $22.50. Over the course of a year, they will pay $270 to the municipal sewer utility. To maintain that rate, though, that same household pays $65, or rather, fails to receive $65 in city services like code enforcement, law enforcement, emergency and fire response, paving, etc.
So if it’s costing that household $65 today, how much would it cost to remove that subsidy? You might be shocked to learn just how much money is being stolen from the city’s general fund – at a cost of more than a half-million dollars in lost city services.
Which would you rather pay to the sewer utility? $335 or $281?