Towns should accept offer from Duke

February 14, 2014 

A Smithfield councilman was skeptical that North Carolina’s public power towns would sell their stakes in power plants to Duke Energy. Too many towns, he said, rely on electricity sales to help fund other government services, such as police and fire protection.

But here’s what Johnston’s public power towns could do if they paid off the debt that has made their electricity rates up to 40 percent higher than Duke Energy’s. They could lower their rates to the point where they could be competitive with Duke Energy, if not for industry then certainly for new housing, which now prefers rural Johnston over it towns.

Town leaders, both elected and appointed, argue that if they stopped using electricity profits to fund basic government services, they would have to raise their property-tax rates to compensate. We would argue that towns could cut spending instead, but politicians and bureaucrats don’t think that way, so for the sake of argument, let’s say property taxes would have to climb to make up for lost electricity revenue.

What that means, of course, is that electricity rates now subsidize property-tax rates in public power towns. Who does that benefit?

In Smithfield, for one, it benefits every property owner in West Smithfield, where homes and businesses buy their power from Duke Energy. And what that means is that Smithfield residents east of the Neuse River are, through their utility bills, paying property taxes that West Smithfield residents should be paying.

In Clayton, the transfer of electricity profits means households are subsidizing the property taxes of some well-heeled retailers, including Walmart and Lowes Foods, both of which buy their power from Duke Energy.

None of this is defensible in the court of public opinion, and we would encourage fair-minded elected leaders in public power towns to publicly challenge council members who support a status quo that favors the elite over the poor and middle class.

In Smithfield, for starters, East Smithfield Councilman Marlon Lee could ask his fellow councilmen to publicly defend their support of tax policy that favors Food Lion, Rose’s and McDonald’s over poor families in his district. We don’t think they could or would.

With the offer from Duke Energy, North Carolina’s public power towns have the chance to rid themselves of debt, make their towns competitive for investment dollars and return fairness to tax policy. We dare anyone to argue why that’s a bad idea.

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