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Is there a hidden tax in Richmond utility bills?

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RICHMOND, Va. -- Attorney Paul Goldman said is a little known provision buried in Richmond's city charter allows the municipality to collect what he calls a bogus tax.

Goldman said the provision, which dates back to Feb. 27, 1954, raked in $25 million to the city coffers in 2015.

Goldman, who is well known in Central Virginia for keeping a close eye on city hall, calls the tax "an outrageous scheme" and "a political racket."

"These aren't taxes that are actually owed, these are taxes that the city just makes up," Goldman elaborated.

Paul Goldman

Paul Goldman

In an op-ed piece for the Washington Post, Goldman first raised the concerns. And as word of Goldman's article spread, many Richmond residents have also voiced their concern.

WTVR CBS 6 reached out to the Richmond Department of Public Utilities about the tax. The department released the following statement:

"DPU does make a Payment in Lieu of Taxes or PILOT as described in Section 13.06 (c)(2) of the City Charter.  the PILOT is made by the DPU because DPU sells a commodity, but is not treated as a commercial enterprise that has to pay taxes to a municipal, state or federal government".

For fiscal year 2016, it is estimated the PILOT will generate $27 million for the city.

Richmond

Richmond

Some city residents like Eva Tiner question how that money is being used.

"I don't mind paying extra taxes if it's actually making my community better or my schools better or my roads better, but I don't know where it's going, so that's where my question is," Tiner said.

Others believe if this tax goes away, which Goldman is pushing for, another tax will take its place.

"I think either way,"  Sheila Davis said. "They're going to get the money they need for whatever they're taxing for, but I think they should be a little honest about it. We ought to know what we are paying for."

However, Goldman maintained that the PILOT money being collected "are not taxes that are actually owed," but "taxes that the city just makes up."