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Springfield City Council discusses the economics of power generation

Thomas Clatterbuck

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Electricity, like any utility, is a businesses. Power plants generate electricity and consumers buy it. Those consumers can be the residents and businesses in Springfield, or they can be further afield if the power is sold onto the grid. How much consumers have to pay is determined by how much it costs to generate a unit of power. The problem for the city planners is that no one seems to know how much it costs to generate power.

There are two efforts underway that should help find an answer to this critical question. The city is bringing in an auditing team for the utility itself to see how it is currently conducting business. Tonight, the council also discussed bringing in The Energy Authority Inc. to help create a twenty-year integrated resource plan. This plan will identify which units the city should keep, and how to adapt to the changing energy landscape. Additionally, the plans should help get a handle on the personnel issues, including the numerous unions that represent the workers. Personnel costs are a major factor in the scale and uncertainty of the operational costs.

Getting the utility expenses under control is even more important now that the city has a negative cash flow. This was not unexpected, but still represents a serious problem.

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Senior strategist, statehouse reporter and political correspondent for Springfield Daily. Graduate of District 117 and UIS. Thomas covers stories in both Morgan and Sangamon Counties, as well as statewide politics.

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Announcements

Southeast branch pickup is tomorrow

Staff Contributor

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Residents in the southeast quadrant are reminded to put out their branches tonight for the fall pickup. Branches need to be out by 6:00 AM to ensure they are picked up. The southeast quadrant is south of South Grand Avenue and east of Walnut Street, and includes the properties around Lake Springfield. This is the only scheduled branch pickup for the quadrant this fall.

You can also check out the city’s map to find out which quadrant you are in and other regulations about the pickup.

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Local

City gets good budget news tempered with warnings

Thomas Clatterbuck

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The City of Springfield is on track for a budget surplus in FY 2019. Based on current revenue, the city may have a positive fund balance of $1.7 million. This comes as something of a surprise, considering the original budget had an estimated $2.6 million shortfall. At last night’s city council meeting, Budget Director Bill McCarty explained what caused the turnaround.

Numerous factors played into the turnaround. Early tax payments, a large settlement from Comcast, and a transfer from Fund 095 to the corporate fund were key on the revenue side. Hiring delays and stabilizing healthcare cost increases have been key on the expense side of the equation.

The city’s good management has been noted by outsiders as well. The S&P affirmed the city’s AA bond rating, which helps determine how much interest is paid on new bonds. A higher bond rating is a good indicator of financial health, and so avoiding a downgrade is very valuable for the city.

Clouds on the horizon

But while the current year is better than expected, the council was given several warnings about the future. Director McCarty pointed out that much of the surplus was due to a one time settlement. That extra million helps this year, but doesn’t represent a lasting increase in revenue. While optimistic about the long

Representatives from the Police Pension fund also warned about the growing pension obligations. Pensions already consume all of the property tax revenue in the city. McCarty said that where property tax used to pay for pensions and other things, now they only pay for pensions; and even other revenue sources are being tapped to make the required payments.

The S&P also noted these long-term challenges. So while the current AA rating was affirmed, the city’s outlook was downgraded from “stable” to “negative.” Although this will not impact current interest rates, it might make future borrowing more expensive.

You can watch McCarty’s presentation to the council which starts at 55:00. You can also watch his after meeting Q&A in the player below.

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Live

LIVE | Springfield City Council October 16th

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Follow along live with the Springfield City Council meeting. Local BSA troop 202 is present. Camp Care-a-Lot is being recognized for their work with under privileged students. Director McCarty will present on the city’s finances shortly.

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