Seward city manager floats cutting electric rates instead of property taxes in 2028

Seward City Manager Kat Sorensen floated a new idea Wednesday: cut everyone's electric rates in 2028 instead of property taxes.

The city would stop charging its electric department the roughly $678,000 fee it pays the general fund each year. That would let the utility cut rates by about a cent per kilowatt-hour in winter or half a cent year-round, Sorensen told the City Council at a budget work session.

It would replace the 1 mill property tax cut the administration has proposed for 2028, worth about $550,000. The rate cut is "a smaller impact than dropping property taxes, but it's spread out over the entire community to all ratepayers," Sorensen said. The summer-only sales tax the city has proposed would cover the lost fee, she said. Finding the difference between the two would be tough, she said, but "I think we could find that delta."

"It was just something that came to mind today as I was looking at the numbers," she said. She called Electric General Manager Brian Hickey, who she said told her, "yes, please, immediately."

The fee has been a point of contention in the community, Sorensen said. It was about $1.1 million in fiscal 2024. She said it would likely go away anyway if Seward sells the utility, forms its own cooperative or creates a municipal authority. A local cooperative running the city-owned utility was the top choice in an unscientific city survey.

A speaker during public comment applauded the effort but said it "almost seems like a Band-Aid." He said he wasn't sure he could support dropping the fee until the city took another look at the electric budget.

The proposed budget includes an electric rate increase of about 3% for inflation. The council took no action. Budget work sessions continue Thursday.