Water ratepayers in San Juan Capistrano are in for a rude awakening. A new audit of the water system's financial mismanagement predates the 2003 merger of the Capistrano Valley Water District and the City of San Juan Capistrano by six years.
You read that correctly. For six straight years the Capistrano Valley Water District was consistently underfunded because of the rate structure.
The dirty laundry is being aired on the pages of the OC Register and after several massive rate hikes (22% in February and 18% more in July) which the audit says aren't sufficient to cover the deficit.
According to the Register, the audit states that the utility "also used one-time revenue from property taxes and developer fees as a stopgap funding measure, which had the effect of hiding structural funding problems."
The report indicates "poor financial communication" may have been part of the problem.
Let's head up Interstate-5 to Fullerton and look at the similarities.
Fullerton hasn't had an audit but it did have a rate study. The rate study appears to have been nothing more than a report to justify nearly doubling water rates. When pressed for hard data and answers on the water system's "in-lieu franchise fee" (an illegal 10% tax on the Water Fund), staff came up empty-handed.
Fullerton has been under-funding the water system since the 1960s. Some might rightfully ask how that is possible and why. Good questions, to be sure. It was in the 1960s that the "in-lieu franchise fee" was put in place by a city council that actually predates Don Bankhead's tenure on the dais. Since then, 10% of every dollar paid into the Water Fund has been skimmed and deposited into the City's General Operating Fund like a 3-year old grabbing at a cookie. That may not seem like a big deal but with every rate hike, the City's General Fund wins big. Not to mention nearly 80% of the General Fund covers the benefits and salaries of employees not associated with operating or managing the water system. It also helps to shore up the growing deficit and pension shortfall. How is that fair? How is that even legal? It's not legal. This January you'll begin to see a more vigorous campaign headed by City staff to raise rates and justify the continued skimming of the Water Fund.
The illegal "water tax" imposed on the Water Fund has reinforced the policy and subsequent affect on our infrastructure with ZERO investment. Now, after 50 years of ignoring the problem, pillaging the coffers, and looking the other way, rate payers will be forced to pick up the tab.
Maybe I can blame my parents. Perhaps Mom and Dad should have been banging on the doors at City Hall in the 1960s and '70s telling the City Council and City Manager to invest in the water system. But they didn't protest City Hall, probably because they were busy raising five kids, paying a mortgage, and worried about their kids heading off to fight questionable wars in far away places.
No, I can't blame them. Like most people, they relied on their elected representatives to do the right thing.
To those who were voters in the 1960s, '70s, '80s, and '90s...here I am holding the bag. How much is it going to cost, you ask, to make up for years of mismanagement and neglect?
About $300-million...
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