Updated: Monday, Mar. 5, 2001 at 22:01 CST

Surging energy bills plague government By Bob Mahlburg Star-Telegram Staff Writer

Call it a one-two punch.

Texas residents still smarting from soaring winter gas and electric bills at home could also face higher taxes or reduced services as state and local governments try to cope with higher energy bills as well.

"This is definitely a budget- buster for many government agencies," said Tom "Smitty" Smith, director of the consumer group Public Citizen.

In state government, school districts, universities, cities and counties, number crunchers are scratching their heads for ways to pay higher energy bills and cut costs.

Natural gas prices have jumped more than 300 percent over the past six months and also have boosted the cost of electricity, much of which is generated with gas. Some government entities, including the University of Texas system, have had to pay millions of dollars more for utilities.

The news is not all bad, however. For some cities, such as Fort Worth, the soaring energy costs are likely to be offset by higher income from the franchise fees that utility companies pay for using city right of way.

Officials of the General Services Commission -- the state agency that pays power bills for many state buildings -- will go before a legislative committee Wednesday to push for $1.9 million to cover electric bills for the rest of their budget year.

"We're asking for an emergency appropriation. Otherwise, it's going to be a long, hot, dark summer for state employees," said General Services Commission spokesman Thomas Johnson. "I'm just trying to keep the lights on and the air conditioning running."

He is far from alone.

Utility bills have doubled for some Texas school districts and counties.

The cost just to keep street lights glowing in Fort Worth has jumped about 20 percent, or more than $300,000 since September, officials say.

The Fort Worth school district spent as much on gas in January as it did all last year, officials said.

"It hit us at a time that we had the heaviest use and it was a cold winter, so you had higher use and a higher price," said Steve Fortenberry, assistant superintendent for business and finance.

Tarrant County's gas costs have doubled from last year.

"Just like residential consumers are being pounded by gas and electric bills, so are local governments," said Don Lee, executive director of the Austin-based Conference of Urban Counties. "Many counties are having to scrounge around in their budgets to pay for increased costs. They'll squeeze something else to do that. Obviously, it can also contribute to a need to increase taxes."

Tarrant County officials have not decided how to deal with the shortfall. But officials typically shift money from reserve funds or from other services, said Assistant County Auditor Ron Bertel.

The University of Texas System, which has 15 campuses including UT-Arlington and UT- Dallas, is also asking for emergency help from Austin.

"We experienced about a 43 percent increase in our energy costs this year," said Philip Aldridge, assistant vice chancellor for finance. "That's about a $50 million cost. Every campus was up by at least 10 percent."

The school district, Tarrant County, the University of Texas system and other governmental entities also are working to conserve power and studying bulk energy purchasing plans to cut costs.

Few officials are talking about boosting taxes, but some said they will reduce other services to cover bills in the short term and budget more money to cover energy costs in the future.

"We wouldn't raise taxes to make this up," Fortenberry said. "Hopefully, it's more of a blip on the screen. At this point, we haven't considered where we would cut back. Hopefully, we would find places outside the classroom to cut."

Smith said he's seen similar approaches around the state.

"It may not be taxes will go up, but what they'll see is a cutback in services, like maintenance will be cut back in a park or for a road," he said.

For some government agencies, there is an upside to the higher bills.

Soaring energy bills have boosted energy taxes and fees collected by the state and many cities.

Income from the state's natural gas tax has risen $700 million -- from $1.1 billion in the 1998-1999 budget cycle to $1.8 billion in 2000-2001, according to the state comptroller. That will pump an estimated $904 million into the state's rainy- day fund. As a result, some lawmakers have suggested using some of the money to help elderly or low-income residents whose gas bills have soared, or even for other state budget needs.

Some cities also have been spared the cost crunch faced by other governments because utility companies pay cities franchise fees.

"It's bad news -- good news," said Fort Worth Assistant City Manager Charles Boswell, who noted that Fort Worth's energy costs have jumped significantly.

"The good news is because of the franchise agreements we have with TXU for electric and gas, we benefit from their increased income," Boswell said. "We get a percentage of that."

In Fort Worth's case, that money should more than offset the higher energy bills, said Danny Reed, who handles utility issues for the city manager.

"Overall, I'm anticipating the city will come out ahead," Reed said. "The citizens will not see any change due to the higher energy costs."

Most cities collect franchise fees, but Reed said other cities may not come out as well as Fort Worth because it has a city water utility and puts an emphasis on energy conservation.

What it means to you:

Soaring energy costs could mean higher taxes or reductions in such services as street and park repairs, as state and local governments try to cope with higher energy bills.

Bob Mahlburg, (817) 390-7675 burg1@star-telegram.com

http://www.star-telegram.com/news/doc/1047/1:STATE21/1:STATE210305101.html

-- Martin Thompson (mthom1927@aol.com), March 06, 2001