Article by Erik Smith. Published on Friday, February 12, 2010 EST.
Utility Played Hardball With Powerless County Until Legislature Stepped In – City Makes Deal on Back Pay, Talks Continue
Boundary Dam on the Pend Oreille River. Photo: Photobucket.com
By Erik Smith
Staff writer/ Washington State Wire
OLYMPIA, Feb. 12.—The Legislature’s frustration with Seattle City Light seems to have lit a fire under the big municipal utility, prompting it to catch up on payments to the small northeastern Washington county where nearly half of its power is generated.
Seattle has been playing hardball with Pend Oreille County ever since an old agreement regarding Boundary Dam expired at the end of 2008. County officials say Seattle should pay them substantially more for the right to operate its big dam on the Pend Oreille River. Seattle says no, and it hasn’t paid a dime in more than a year.
In the Legislature this year lawmakers have been grilling Seattle lobbyists and accusing them of negotiating in bad faith. A bill backing up the county position has begun to gather steam.
The Queen City changed its tune shortly after the House Ways and Means Committee this week passed House Bill 2925 by a vote of 22-0. Within 24 hours it went back to the table with the county and offered a deal on back payments.
County commissioner Laura Merrill said the county agreed Thursday to a $1.35 million deal covering back payments to Pend Oreille County for 2009. The deal doesn’t settle the big-picture debate about the way Seattle ought to be compensating the county. But it does bring some relief to a county that depends on Seattle’s annual payments in order to make its payroll. Because Seattle did not pay in 2009, the county had been forced to borrow money in order to balance its budget.
Merrill said the Legislature’s support for the bill seemed to make the difference. “We’ve been negotiating for 18 months and we haven’t gotten anywhere,” she said.
She said the county will continue to push for the bill’s passage during the 2010 legislative session. That may be the leverage the county needs in order to force the city to negotiate a new deal.
County Has No Leverage of Its Own
Merrill points out that only the Legislature has the power to force the city to bargain. The county can’t tell Seattle to throw the switches and power down the dam. But as long as a bill remains a possibility, Seattle may want to work something out.
The dispute has to do with the way Seattle compensates the county for dam operations. Because City Light is a government agency, it doesn’t have to pay property taxes. The 1955 state law establishing Boundary Dam says that Seattle is required to negotiate with the county over impacts to local services and lost revenue.
But since the dam began operations in 1967, Seattle has offered compensation only for county services. It has maintained that it should not have to pay for lost property tax revenue. In Seattle, Pend Oreille County has been depicted as a tiny local government looking for a handout from a more prosperous part of the state.
But the county points to the wording of the law, and observes that if the damsite had been developed by a private utility, local tax payments would have been three times higher. If it had been developed by a public utility district, payments would have quadrupled.
The county’s proposal would double Seattle’s payments, to a little less than $25 million over 10 years. Seattle has offered roughly $15 million. “We’re willing to negotiate,” Merrill said. If Seattle doesn’t strike a bargain with the county before the session ends March 11, and the bill passes as written, the city will be on the hook for the full $25 million.Your support matters.
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