The OC Register is reporting that much of the outrage and confusion over the new increase is "as result of a previously approved 16.2 percent water rate increase that becomes effective June 1 – just one month before the billing structure would take effect."
Fullerton is facing a similar challenge. Our water rates create a moving target for infrastructure planners. As rates increase and usage declines, our ability to maintain the water system declines. With everyone cutting back and being a little wiser about water usage, revenues to support the water distribution system are being underfunded. As MWD Director and former candidate for the state assembly said, “...the whole world of water is ballet.”
It doesn't have to be that way.
It seems that every year an elected official stands before the people of Fullerton and declares that the increase being voted on is not a tax or even a City-imposed fee but rather a "pass-through" expense being imposed upon the people of Fullerton by the evil water districts from which Fullerton must purchase our water. The increase stems from increased costs to operate the water districts. It covers the actual cost of water, pumping taxes, labor, benefits, energy costs, etc.
As with most proclamations of the sort, there are half truths to the pass-through increases. It is a tax increase being recovered by the City because the City's leadership does not want to restructure the budget to absorb the increase. So you and I get the bill while water districts continue to grant early retirements, raises, and other perks. Early retirement can be a problem because it takes a presumably productive worker out of the work force and shifts the financial burden from the agency's current budget on to the pension system, both of which are funded by taxpayers.
There are many things the water districts can do to provide clean water at reasonable rates. In Fullerton, there are actions we can take as a city to provide responsible management over one of the single most important pieces of infrastructure.
For starters, we need to recognize the actual cost to deliver water to your meter. The pass-through taxes passed by our council over the years only covers the cost of purchasing the water from the water districts, not toward the system over which the City controls.
This means there is a burden on our infrastructure which the City of Fullerton is not being completely compensated for. Only about 36% of your water bill (less sanitation, waste, and other fees on the utility bill) is going into the Water System with portions of that percentage also going to cover administrative costs.
Therefore, 53% of what you pay for water covers the actual cost of water with about 11% of the total cost going into the General Fund to pay for police, fire, parks, and other departments in the form of a franchise fee or franchise tax.
You will hear a lot of people, city staff and politicians alike, say that everyone charges the franchise fees and that they are a normal part of doing business. They might add that the funds from the franchise fee help offset some of the costs of managing the water system. I'm not so sure about that.
The first step in managing our water system is being able to measure the cost operating and maintaining the system. Understanding the actual costs of the system, not including the cost of the purchased water, will allow us to see with clarity what we have been failing to address for a great many years.
Once we know the true cost, we could apply that cost proportionally to each water meter while bearing in mind that the costs to manage and maintain the system are fixed (except for inflation) and that the system is designed to provide water to all meters at the same time. Though rarely used all at once, the system must be maintained for the maximum potential usage.
We should insist that we first apply the 11% franchise fee back into the maintenance and operation of the water system. This would eliminate much of the need to raise water rates on users for at least 3 years.
It is also important that we address the water system budget and the way government, Fullerton in particular, does business. We, acting as the government, cannot expect to recover every single cost of operating simply by charging users. If that were true, all of Fullerton's roads would be toll roads and no one would be permitted to use one without paying the fee. We could apply the same logic to our parks and street lights. We could apply it to our libraries and other services.
As taxpayers we assume that a portion of the cost of rent or mortgage is going to be spent on property taxes. We expect our government to redistribute those funds in a manner that best represents the needs of our communities. Unfortunately, much of the money falls into the Sacramento abyss -a topic for another day. Therefore, our cities and even our counties do not have the funding which they require to operate based on revenue projections from 5 to 10 years ago.
This means our city budget needs some serious and significant adjustments. We no longer receive the "fluff" or padding that allows us to spend money on gimmicks and fun events. Instead, we must shift our financial priorities toward addressing our infrastructure in a meaningful and, dare I say, comprehensive way.
Readjusting our priorities and reflecting those changes in a budget that makes sense for the near and longterm future is the only way we can hope to stay out of the financial pitfalls of communities like Vallejo, California.
There are several ways you can get involved and fix this antiquated system.
First, understand the City's budget. There is a budget workshop on Tuesday, April 26 at 6PM in the City Council Chambers. Contact the City Clerk for more information.
Second, understand our water system and the rate structures that are being proposed. Click HERE to go to the City of Fullerton Water System Management webpage. There will be opportunities in the near future to speak out on this. I hope you will take an hour or two from your busy schedule to express your view and offer a solution.
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