Concerns over Water & Sewer Rate Hikes

Last week, Mayor Jerry Sanders released a proposal devised by city staff that calls for a massive increase in our water and sewer bills. If enacted, residents will see a whopping 35 percent increase in their sewer bills and a 29 percent increase in their water bills over the next four years.

In real terms, the typical resident will see his monthly bill go from the current $78.30 to $105.53. Commercial, restaurant, apartment and industrial users will see even bigger increases in their bills.

Let me begin by acknowledging that there is absolutely no question that the city needs to invest in its water and sewer infrastructure. As previously reported, years of financial mismanagement and neglect have left the city with a severe backlog of water and sewer projects. Stimulated by a series of lawsuits filed by environmental groups, the city now faces court and regulatory mandates to complete a laundry list of projects in the next few years. Yet another lawsuit settlement will require the city to find funds to correct excessive billing of some residents in previous years.

Let’s also recognize that Mayor Sanders did not create this situation – he inherited it from previous the mayor and city councils. Nevertheless, he must now devise and implement a plan to finance the completion of the mandated water and sewer infrastructure projects.

Crunched for time and up against the impending court settlements, there are a lot of folks around City Hall who are taking a “be quiet and swallow it” approach to the proposed rate hikes.

I couldn’t disagree more.

First, anytime you ask San Diego taxpayers to give more money to their government, it deserves close scrutiny. We’re talking about a huge increase in rates – at a time when San Diegans are already paying the highest or second highest water and sewer rates in the entire state (depending on what category you fall in).

The San Diego County Taxpayers’ Association rightfully opposed the last rate increase proposal -suggesting that reforms be added. Had the association been successful in convincing the media and the public of its concerns in 2002, perhaps there would be more money available today for the water and sewer infrastructure projects. That’s exactly why I believe we owe it to ratepayers to carefully scrutinize the city’s proposed rate increase this time around.

Second, the city has a history of proposing water and sewer fee hikes, only to raid those monies for other purposes. Recently, officials admitted that the water and sewer funds were raided over the past decade to cover general fund deficits (Service-level agreements, right-of-way fees, asset transfers, to just name a few.)

The last time the city hiked water and sewer rates it vowed that the monies would go to “infrastructure.” Now five years later, we have an even worse infrastructure crisis in the water and sewer systems. And once again “infrastructure” is the only rationale being touted for the massive increase. Unfortunately, as I’ll explain in my next post, a close look at the rate hike proposal demonstrates that the monies aren’t all going to infrastructure. A significant portion of the rate hikes are going to cover increased labor and pension costs in the water and sewer departments.

It probably comes as a surprise to no one that I am opposed to tax and fee increases, especially in a government entity that has a past history of mismanaging tax dollars. But what bugs me even more about these specific fee hikes is the city has yet to adequately explore credible alternatives to reduce or even eliminate the need for water and sewer rate increases. San Diego is not the only city in the nation that has faced severe infrastructure deficits – and been forced to act under the threat of court mandate. Some of those cities were able to address their infrastructure needs without rate increases. The experiences of those other cities call into question the rate hike being proposed here in San Diego.

Fortunately, the citizens of San Diego still have time to weigh in with their thoughts and ideas. The mayor is still working out some of the details of a final package that will be submitted to the City Council for approval in January. The mayor has been very receptive to soliciting and incorporating outside input on important policy issues such as this. He has shown he is committed to true change and reform at City Hall. The city bureaucracy has had its chance to weigh in. Under the light of public scrutiny, we can help the mayor devise a better plan.

I’d like to spend my time in Café San Diego framing some questions the city should have to answer on the water and sewer rate hikes, as well as sharing some alternatives to the increases. More importantly, I’d like to solicit your feedback and ideas on how to avoid water and sewer rate hikes. To get the thinking process rolling, consider a few questions:

• Can we cut the operations (i.e. labor) side of the water and sewer budgets, and in doing so, free up monies for infrastructure (i.e. capital) projects? How much and how?
• Outside of fee hikes, can we tap alternative funding sources for our infrastructure needs?
• What should be done to ensure that water and sewer funds are spent on appropriate projects – and in particular are dedicated to bona fide infrastructure projects?

I’ll address the importance of these three questions in my next posts – and I am looking forward to a free-wheeling discussion with you on some of the answers.

– CARL DeMAIO