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BOOK 98 PAGE 109 -7 augmented by the need to compete for low-cost financing in the bond market are the only effective checks and balances for keeping the municipal utilities, both efficient and accountable. The elected governing board's responsibilities go far beyond the oversight of the department of utilities: taxes, roads, schools, security, planning - the list goes on and above all - there is the politics to ensure reelection. Accountability of the elected Board members is to the voters, and not to utility customers. Moreover, few elected Board members have the expertise needed for the utility oversight function. This is the reason many communities have adopted a two-tier governing structure for municipal utilities. Utility commissioners usually are selected from the business community and are appointed for staggered terms. Once appointed, commissioners cannot be removed except for felonious or unethical conduct, and -thus aro able to maintain their non- political status. The public also is better able to discern which body to hold accountable for utility -related concerns. The two-tier governing structure does not at all rule out a direct benefit to general public from the operations of a municipal public utility: It is entirely proper for the utility to make payments to the general fund equal to taxes which would be payable by an equivalent investor- owned tax -paying utility. These in lieu -of tax" payments simply compensate the general fund for tax revenue actually given up by establishment of a publicly -owned, tax-exempt utility system. Section 6 - Co -mingling of the General Municipal and Utility Funds The co -mingling of these two funds beyond the in -lieu of tax contributors *is improper and probably . unlawful in most jurisdictions. To illustrate, in New York State the municipal electric utilities are regulated not by that state's Public Service Commission, but by the Power Authority of the State of Nevin York. PASNY, itself a "municipality and a subdivision of the State of New York," is the wholesale power supplier of low-cost hydroelectric power to those 'munies,' does allow these in -lieu of tax payments while limiting the transfer to the amounts so defined. This is because the savings from the tax-exempt municipal utility operations must accrue only to the utility's customers But absent regulatory overview or without the restraint of internal checks and balances, fiscal pressures upon the municipal governing Board may encourage additional transfers of utility revenue to the general fund in order to offset the shortfalls in the general tax revenue. There is little that is more resented by voters than hikes in all kinds of taxation whether on income, real property or on sales. ' Furthermore, the more affluent the classes of taxpayers, the greater is their political influence to deflect tax increases from themselves. This creates tendencies among legislators to masquerade new taxes or increases in the existing ones as user fees, impact fees, or where municipal utilities have been established, to manipulate utility rates to shift the burden to those least able to fend for themselves in the political arena. This kind of skullduggery works because too many members of the voting public lack cognitive political acumen to see through it and to recognize that those creative inventors of fees or skewed utility rates are often the same elected officials who are in control of the lifeblood of an organized society - the system of taxation. 104 May 14, 1996