Water Rate Increase Notice Heading to Your Mailbox

The notices will go out June 1 and will advise water rate payers that their water bills will increase as much as...6% per year every year for 5 years and then 3% every year for 5 more years.  But wait there's more! 

There will also be at least a 1.8% additional increase to cover that pesky "pass-through" cost that is a direct result of rate increases from OCWD, MWDOC, and MWD.

All of these are compounding interest rates with numerous variables that will likely increase.

Throughout the Water Rate Study process I struggled to get anyone to tell me what the actual cost is per meter.  I was told continually that the cost is really high and we just can't go there.  How expensive is it??  After hours and hours of meetings and studying I still don't have an answer. 

Here is what I do know. 

All of the "pass-through costs" related to the City's purchase of water are grossly underestimated.  I fear the actually "pass-through" cost will go up as much as 20% in just the next 2 to 3 years. 

The Water Rate Study showed a 3% increase in city employee costs could be expected despite the fact that the proposed budget shows a 3% in crease for CalPERS (pensions) for general (non-safety) employees and a 7.4% increase for safety employees.  The same proposed budget shows group benefits to increase 6.8% for non-safety employees and 7.8% for safety employees.  So, right from the start we have a glaring flaw that needs to be rectified.



Sexual harassment training is just one of the

Ethics Office accomplishments.  MWD Ethics

Office also created and provided Rumors and

Gossip training and ethical decision making

training for managers and employees.

 The Water Rate Study also shows the MWD pass-through as increasing by 6%.  However, MWD's proposed budget shows an increase of 23% for system operation as well as another 23% for construction costs.  The same MWD proposed budget shows MWD employees receiving a 12% increase in salaries and benefits and 18.4% increase in "labor costs".  The MWD budget has other fluff, such as the Ethics Office I wrote about HERE that costs rate payers $573,000 to review legislation and train employees on sexual harassment.

And the most egregious part of the Water Rate Study is the sacred franchise tax.  Most people pay their water bill believing that when they pay for that portion noted as "water" that they are in fact actually paying for the cost to purchase water and maintain the water system.  They are wrong.

First, according to the Water System Manager, we do not recover the actual cost of maintaining and delivering the water.  Hence the water rate study.



City profits from hidden tax!



Second, 10%-11% of your water bill (not your total utility bill) goes into the general fund.  The general fund is what pays for a major portion of our public safety and employee benefits such as pensions.  That 10%-11% does NOT go into the water fund.  So, when I asked the consultant from Municipal Financial Services how much the City marks up the water I was shocked that he said the City does not make any money on water sales.  Of course the City makes money, $2,486,000 is a nice chunk of change which that can only be labeled as profiteering or perhaps municipal greed. 

You see, franchise fees exist so that when a company, let's say AT&T, buries wires in the road, they have to pay a small fee to the City as rent.  That fee helps cover inspection and maintenance costs and is similar to a property tax.  That seems like a pretty rational way to deal with private entities using public right-of-way for utility systems but when the City charges its own water rate payers, it is adding insult to injury.



In the case of Fullerton's Water Rates a few things need to be made crystal clear to rate payers and to the City Council:

• First, rate payers do not pay enough to cover the actual cost of maintaining and replacing the water system.
• Second, our current water rates are based completely on consumption which is dependent on users consuming more water in order to maintain the system.  In fact, the more you conserve water, the more the City of Fullerton must raise water rates.  That's a stupid way of addressing our infrastructure.  No matter how much water you use or don't use there is a specific cost to make it available to you.  The water bill should have 2 segments: one for the fixed cost to have water available and a second segment that reflects the exact cost for water consumed.  That would be the most transparent way to address this.
• Third, the City Council must abolish the franchise tax.  I realize that it will cause a $2.5-million shortfall in the general fund but keeping the tax in place is abusive and wasteful governance.  The City Council and City Manager's Office must be reminded that they, like the rest of us, must live within our means.  That means its time to drop the $50,000 allocation for membership in the League of Cities and Southern California Association of Governments and cut out the $50,000 allocated in the Public Works Department's Capitol Improvement Program to replace window coverings at Basque Yard (see page N-10 of proposed CIP).

At a time when 1 out of 4 of your friends, family, and neighbors are out of work, we need to remind our elected representatives of their fiduciary responsibility to voters and taxpayers. 

No comment.

Your last chance to speak up is July 19 at the City Council meeting and public hearing.