This week's headlines

Complaint form approved

by school board

Mattison indicted on

four felony counts

$2.5 million energy subsidy for Valdez challenging

Council grapples with IRS and other issues

By Lee Revis

Editor, Valdez Star

Valdez Mayor Bert Cottle said he never thought it could be so hard to give Valdez residents back some of their tax dollars.

But during a discussion on how to disburse $2.5 million in city funds earmarked for an energy subsidy to Valdez residents, the Valdez City Council did not get very far at Monday night’s council meeting.

Federal taxes, CVEA billing procedures and several other sticky problems need to be sorted out by city administration before a plan can be brought to council for approval.

“Nothing has been decided yet,” City Manager John Hozey told the council, “People are expecting it,” he said, “but it isn’t happening yet.” 

The simplest plan – at least on the surface - tossed around since the council first directed Hozey to bring them a plan to subsidize energy costs to Valdez residents, would split a one million dollar check written to Copper Valley Electric Association. The funds would be split evenly between all residential customers in Valdez.

However, CVEA CEO Robert Wilkinson told the council that the co-op’s billing system is not set up that simply. For starters, CVEAs Valdez billing area extends well past the city limits, up to Mile 27 on the Richardson Highway. Another potential problem involves people with multiple accounts.

“We have 1900 residential customers in Valdez,” Wilkinson told the council, noting that it would be costly for the co-op to divide the funds individually.

“Robert, you do that anyway,” snapped council member Dave Cobb “to me it seems very simple.”

Cobb, along with council members Gay Dunham and Connie Stephens, complained openly that in private discussions with other CVEA insiders,the co-op had hinted that a percentage of the subsidy might be appropriated for administering a lump sum payment.

“That attitude just doesn’t agree with what I had in mind,” said Dunham, saying other retailers would likely offer a hefty discount on a multi-million dollar purchase rather than asking for more.

“I would like to push back a little bit on that attitude,” he said. 

“We did prepare some draft guidelines” Wilkinson told the council, conversation starters for future talks between city hall and the co-op, “Those draft guidelines do not provide for an administrative fee.”

As a disclaimer, Wilkinson did say he could be ahead of his board of directors on the matter.

So why doesn’t the council just cut everyone a big check, similar to a federal tax refund or a permanent fund dividend?

The Internal Revenue Service is why.

Federal tax liability reared its head repeatedly in various plans proposed.

Preliminary findings say the IRS would get a hefty chunk of any cash rebate given directly to consumers. The same problem would occur if people were asked to sign up for an energy rebate. It’s only non-taxable if it’s a handoff type of subsidy.

The mayor also pointed out potential “perception problems” with state and federal lawmakers that control the purse strings for funding large projects public that are typically government funded.

“I’m for whatever gets the most money to the people,” said council member Joe Prax.

Subsidies for fuel oil was also brought up, though most council members seemed to learn towards providing relief in only one form and in the easiest manner. 

“The council approved the money,” said Cobb, now the council just needs to figure out how to do it. 

“Nothing’s been decided yet,” said Hozey before telling the council that he needs more time to do research and brainstorm with other concerned parties, including CVEA and the tax accountants.