Independent Oversight and Audits

Many of the posts by voiceofsandiego.org readers today have illustrated their frustration and complete distrust in the city when it comes to water and sewer fees. (For those of you just joining us, a quick tour down memory lane: Service Level Agreements, Right-of-Way fees, asset transfers, to just name a few.)

Put simply, San Diego residents do not have confidence that their existing water and sewer fees (or any increased fees for that matter) will be properly spent. Unfortunately, given the spin the city is putting to its latest fee hike proposal, I also do not have confidence the monies will go the proper uses.

For example, the city is insisting that all previous raids have been stopped and the system has received a full audit.

First, the previous raids have yet-to-be repaid. When pressed to address the issue of repaying the funds for more than a decade of diversions of tens-of millions in ratepayer fees, the city has dubbed the idea “water under the bridge.” We would be so lucky to have the city’s pension fund take the same stance on the raids on that fund over the past decade. Any funds raided should be returned by the city before any rate hikes are suggested.

Second, as the city had to admit at the press conference last week, the Mayer-Hoffman firm did NOT perform a full audit. It conducted a review of the rate case – a major difference.

And finally, none of the reforms outlined in my posts today come as a surprise to the water/wastewater departments. As many of you may know, we have been working on water and sewer fee integrity for years – and referred our concerns in 2004 to the County Grand Jury. Others have similarly stepped forward to offer the city advice on how to cut costs or use alternative financing options.

Put simply, those reforms – while referenced in the opening two-page press release of the proposal – did not materialize in the actual details of the proposal. And that should raise red flags, and diminish any confidence in the water and wastewater departments to be accountable with more taxpayer monies.

Taxpayers deserve accountability for these funds. The only way to achieve true accountability and restore public trust is to provide truly independent oversight and audits of the funds. Such an independent mechanism is missing in the proposal as currently presented – though Mayor Sanders has committed to creating such a mechanism in the final proposal that he will submit to council in January.

The only current “oversight” mechanism for the water and sewer funds comes from the Public Utilities Advisory Commission (PUAC). Unfortunately, the PUAC is appointed by the very politicians they are supposed to police – and some members of the PUAC have conflicts of interest.

We have suggested appointment of a Water and Sewer Oversight Board using a selection process modeled after the Grand Jury. Average ratepayers would be selected by a retired judge; anyone with a conflict-of-interest would be disqualified from serving on the oversight board. More importantly, the Oversight Board would be given the authority and funds to conduct an independent audit of the fees. While the city is currently touting studies by various consultants to provide assurance that raids on the water and sewer funds have stopped as of this year, none of these studies are actual audits of the funds. Just as we say with the now notorious Vinson-Elkins report, consultants sometimes give answers the politicians want the public to hear.

I’m looking forward to Mayor Sanders’ suggested oversight/audit mechanism. Merely tweaking the existing PUAC membership, however, might not satisfy taxpayers who want a truly independent audit of and watchdog for our water and sewer fees.

– CARL DeMAIO