Good move on tap fee hikes

The Town Council recently had the opportunity to consider using its "redistributive" powers to make decisions with a resounding impact on Culpeper's economy for years to come.
The fiscal budgets of our local political jurisdictions are soaring into the red. In order to stop this budgetary short fall, local political bodies like the Town Council aim to raise revenues. Also factoring into the equation is the need for either a boost in infrastructure or an ease on its demands.

Two policy ideas were being explored by the Town Council to alleviate these problems. The first, raising energy costs extended to the largest energy consumers in Culpeper, met with approval Tuesday night. The other, increasing the cost to tap into or join the town's water system, was nixed.

On the surface these ideas seem to be great choices to increase revenue without  taking money from a large number of voters. But it seems a large part of these fee increases would affect big businesses in Culpeper.

It does not take an economist to figure out that this could have a negative impact on future economic growth. And let's face it, Culpeper could stand a couple of large employers to open shop in Culpeper other than retailers and restaurants.

The first policy, which raises energy costs for large consumers, does have some intuitive sense at first glance. Obviously it does increase revenue which is estimated by the town to be $107,000.

Also an increase in energy costs for large consumers like Wal-Mart would force these consumers to use energy in a more efficient manner, which would make for better environmental practices. However, an increase in energy costs will most certainly hurt Culpeper's economy. It is doubtful that those consumers affected will up and leave town, but it is probable that less businesses will decide to open shop in Culpeper. This is where the danger lies. By raising the cost of doing business in Culpeper, the number of new large businesses will fall. This will slow Culpeper's economic growth, but it will raise a small amount of revenue and curb strains on the town power grid.
There is little difference in the story when looking at the increase in fees to tap into town water. However, it looks as though the residential sector would have been slowed a little more by this fee increase.

The Town Council has apparently weighed the end results of these two policies. Thankfully, the water tap fee increase was nixed to save a struggling housing market and at the same time encourage commericial and industrial growth. However, the vote to raise the cost of power to large businesses is somewhat disappointing for growth down the road.

On the other hand, a slowdown in economic growth may not be too bad if handled correctly. Culpeper has been growing at an irresponsible, unhealthy pace. If you don't agree then explain the intense strain on infrastructure and local government budgets and a severely depressed real estate market.

Furthermore, the hike in energy costs may force these large consumers to use their power more efficiently.

Worth Richardson is a graduate student in economics at Old Dominion University. He can be reached at .