Water Rate Study Ad Hoc Committee Calls On Council to Rescind Water Tax


Last night the Water Rate Study Ad Hoc Committee voted unanimously to recommend to the Fullerton City Council that the “in-lieu” franchise fee, or “water tax” as it has become known as, should be suspended indefinitely.

Another motion was made to recommend an audit of the Water Fund. The motion failed 5-5.

Some members stated they had enough reports and felt spending more money would not provide any answers. One member even said that no matter what is discovered in the audit, it would not be enough for some.

Others, like myself, feel it is a disservice to the public to not account for the misappropriated funds. As we look to answer the question of how much was overcharged to ratepayers, we realize we cannot arrive at a fact-based answer. Instead, the city’s staff will have the Ad Hoc Committee look at what could or perhaps should be charged to the Water Fund. That may be an appropriate step going forward but without an audit we will never know where our money went.

Water System Manager Dave Schickling offered up the City’s Comprehensive Annual Financial Report as an audit that covered the Water Fund. Unfortunately, the CAFR does not look at the Water Fund in any detail. Instead, the accounting consultant was provided total dollars into and out of the Water Fund. This may show that the Fund is operating in the black but does nothing to ensure that the transfers were legal or that the funds were used in support of water projects and system management.

I asked the Director of Engineering, Don Hoppe, and the Water System Manager, Dave Schickling, about how Maintenance Services bills their time to repair water leaks and the street that they dig up. They said the time is all billed to the General Fund. At the May 23, 2011 meeting the Water Rate Study showed that Maintenance Service accounted for 21% of the operations and maintenance of the water system. This created some confusion, at least for me, because the Rate Study showed these maintenance costs as being part of the allocation from the Water Fund and not part of the franchise fee. In the end, I am left to guess where at least $22.5-million was spent.

The chart below shows that Maintenance Services expenses accounted for 21% of the O&M expenses, “Other Expenses” as 2% (read the footnote on the chart to see what “other” refers to), and then the Franchise Charge at 11%. According to the City, this chart represents all of the costs and expenses necessary to operate the Water System and consequently the Water Fund.

City Manager Joe Felz will be compiling what he believes to be a list a various “costs” to bring back before the Ad Hoc Committee. The purpose would be for the Ad Hoc Committee to determine what “costs” are appropriately associated with and billed back to the Water Fund.

The Ad Hoc committee seemed somewhat unified in a desire to have only the actual costs billed to the Water Fund, but as we have seen, those “costs” are subject to staff interpretation.

Since last night’s meeting, many members have expressed their concern over the way the entire Water Rate Study has been handled.

I think a large part of the problem has been the business-as-usual approach by staff to have a committee rubber stamp studies, reports, and recommendations all at the behest of city staff.

That’s not to say the process yielded no results. In fact, early in 2011 I made it my goal to end the water tax. Last night, the first milestone was reached with the Ad Hoc Committee’s recommendation.

As a final thought on water rates and the City’s handling of this issue, I want to draw your attention to the City’s Budget Study Session tomorrow. The purpose of the meeting is for the City Manager and department managers to present their respective budgets. This is where we find out how much of our money the City would like to spend and where they will spend it. Even though the Ad Hoc Committee recommended that the City Council end the water tax completely, the City Manager, Joe Felz, intends to move the budget forward on the assumption that the General Fund will continue to receive a percentage of the Water Funds revenue. So you see it is business as usual at the Fullerton City Hall.

Business as usual left us with an $8-million budget gap in the two-year budget for 2011/2012 and 2012/2013. The proposed budget for 2012/2013 & 2013/2014 will have a $5-million deficit with the ending of the water tax and the official plan is to ignore it.

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  1. #1 by Fence sitting Cardboard Candidate on April 10, 2012

    I’m sure that committee member who said “no matter what is discovered in the audit, it would not be enough for some” is a man of very high character.

  2. #2 by Jane H on April 10, 2012

    “Joe Felz, intends to move the budget forward on the assumption that the General Fund will continue to receive a percentage of the Water Funds revenue.

    Sneaking it into the budget doesn’t change the reality, but those numbers sure look good on paper because they love to see the money pouring into their bank accounts.

    Greedy SOBs

  3. #3 by merijoe on April 10, 2012

    I wonder what excuse the three Rip Van Gassy’s and their “legal” dream team leader, Count Chocula, will come up with to keep the illegal water tax on the ratepayers bill for another 2 wks and beyond.

    I wonder who wise Sharon “I didnt do it” Silva will pass the buck to this time.

  4. #4 by van get it da artiste on April 10, 2012

    refusing to pay for an audit when these same persons approved $6 million to move a McDonalds a few feet from its original place. this audit must go forward because it will reveal the depth of corruption in our town and who benefits from continuing this culture of corruption. We, the good people of fullerton, must treat our city council as our representatives and not as princes and princesses of Fullerton. We must demand from them an accounting of our money

  5. #5 by David Bailey on April 10, 2012

    Your commission should get a complete audit to really understand what happened so you can remedy the situation with eyes open.

    Without proper information or a complete picture, you are only speculating and shooting in the dark.

  6. #6 by van get it da artiste on April 10, 2012

    as for Joe Felz, the master of sociology and no-nothing in finance or public administration, will do his masters’ bidding, Jones, McKinley and Bankhead, and rubber stamp with approval continued gouging of the good people of fullerton with illegal water tax

  7. #7 by Fullerton Lover on April 10, 2012

    No Recall No Justice No Peace.

  8. #8 by Anonymous on April 10, 2012

    So what is left to do now that the committee has spoken?
    Will rescinding the tax be up for a vote tonight?
    Does a council member need to call for a vote on rescinding the tax?

    What’s next?

  9. #9 by Anonymous on April 10, 2012

    Tonight’s city council meeting is just a budget workshop.

  10. #10 by Anonymous on April 10, 2012

    Please help me understand correctly…

    They will stop charging the illegal fee, but refuse to look back and find where the illegal monies went? The fact that we rate-payors are all due money from overpayment and they refuse to account for it, therefore a refund isn’t due?

    Do I have that right?

    The way I see it, Sharon SSSSSSilva is made of cellophane, don’t be looking to her to “stand up’ and do anything moral. Her motivations are only self preservation for her next election. She didn’t give a flying fart that it was illegal for the 8 or so times she voted for it…now (that she needs some reputation repair and) she suddenly cares?

    SSSSSSharon, you must think the entire city of Fullerton is as stupid as Dick Jones.

  11. #11 by Anonymous on April 10, 2012

    “We believe the Water Tax is wrong and should be stopped. We also believe there is no need to find out where the money went (Jedi hand wave).”
    “These aren’t the droids your looking for….”

    oh FOOLerton

  12. #12 by Johnny Cochring on April 10, 2012

    Do I heard “class action lawsuit?”

  13. #13 by truthseeker on April 10, 2012

    Great next Tuesday lets see the vote to stop the tax immediately and lets see a call to study to begin calculating the refunds owed to the ratepayers. It is never too late to do the right thing even if it is expensive or on this case detrimental to the city’s finances. We pay a city manager and staff good money to figure this kind of stuff out so have at it gang. Were watching and waiting and I can already figure that for my 14 years in Fullerton the city owes my family about $1300. Looks like the new council majority will be a much needed blessing on “Hazard County” that I thought was Fullerton when I moved here.

  14. #14 by van get it da artiste on April 10, 2012

    know-nothing

  15. #15 by The Fullerton Harpoon on April 10, 2012

    They will budget the BS 6.7% figure their consultant cooked up.

    The Council can derail that at the “workshop” by giving appropriate direction to Felz. Of course the appropriate direction would be to scrap all of it as illegal so naturally the Three Hollow Logs won’t do it.

  16. #16 by Peaches on April 10, 2012

    Budget Workshop is tomorrow (April 11, 2012), Public Comments segment is included in the agenda

  17. #17 by Concerned Texan on April 10, 2012

    Is it even possible for the citizens of Fullerton to file against the City Council concerning a refund? Perhaps individuals could go to small claims court? I read a woman who owned a Honda sued the company in small claims court and won. Perhaps individuals seeking a refund of an illegal tax could address it in small claims court against the city of Fullerton?

  18. #18 by Vernon Dozier on April 10, 2012

    Aren’t we due for a response from the Howard Jarvis folks since the water rate study was released?

  19. #19 by PJ on April 10, 2012

    It’s time for new candidates in the recall to start formulating a plan to bring our budget into balance.

    When can the city renegotiate union contracts, for example?

  20. #20 by merijoe on April 10, 2012

    Was last night’s Adhoc meeting on video? If so, does anyone have a link opf it to share

  21. #21 by The Water Guy on April 10, 2012

    The next slug of data by city staff to the adhoc committee is a variation of what they already attempted to do in February with the report by Municipal Government Finance Services. When records of monthly water fund transfers to specific general fund line items was requested staff replied that they don’t keep such records. Without a real specialized audit how is the council or public to trust what charges are warranted? Half the adhoc committee reacted to estimates that a specialized audit would cost “more than $100,000.” Yet the comprehensive annual financial report (“the annual audit” or CAFR) for the whole city only costs $35,000. Those two things can’t be true or else staff would have to admit that the City’s CAFR is based on a small sample of the city’s books. Plainly, the city staff does not want to deal with an audit that could serve as a reliable guidepost in asserting cost of service accounts and amounts. In fact, in trying to bring about a conclusion to the debate, the city manager said that he would provide the information to the adhoc committee which will in effect conduct the “specialized audit.” Really? Can anyone take that seriously? The adhoc committee is made of dedicated and helpful citizens but auditors they are not.

  22. #22 by The Water Guy on April 10, 2012

    As ridiculous as this may sound, going forward, if you want to stop the city from making invisible and soon to be arbitrary charges to the water fund we all pay for, the best form of protest would be to conserve water. 10% may add up to one day less per week of watering your lawn if you are not minding your irrigation controller.

  23. #23 by The Water Guy on April 10, 2012

    At the next council meeting, there will be an agenda item based upon a motion made by Quirk-Silva and seconded by Whittaker to rescind the invisible 10% water tax.

  24. #24 by Christian on April 10, 2012

    The reasons they gave the Adhoc an estimate of $100,000 is because the auditor will have a difficult time trying to account for the money. Joe Felz through out $100,000-$200,000 to make the adhoc members reluctant to recommend spending that much money. It worked and the Adhoc was split.

    An audit would probably show massive illegal spending and fraud.

  25. #25 by The Fullerton Harpoon on April 10, 2012

    I’d like to know what Doug Chaffee’s position on the water tax is. Anybody know?

  26. #26 by The Water Guy on April 10, 2012

    The audit estimate was just one red herring raised by staff and consultants during the adhoc committee meeting. The other was the prospect of “privatizing” the water system and having water rates sky-rocket. The consultant and committee’s chair made a big deal of this possibility. In the end, they meant to say: “Trust us or you WILL pay more.” The irony is that we are headed toward an arbitrary decision about cost of service that will cost us more any way.

  27. #27 by The Magical Tax on April 10, 2012

    “The magic of the water tax…you get to keep ALL of it.”

    Just kidding. Doug Chaffee didn’t really say that. Yet.

  28. #28 by Vernon Dozier on April 10, 2012

    From his website: “Water rates must be legal and fair.”

    http://www.chaffeeforcouncil.com/issues
    (click the first item about fiscal responsibility)

    The thing that bothers me about Chaffee is he never offers specifics about anything. He tries to be palatable to everybody and it’s anyone’s guess how he would actually vote on various issues.

    His section about Education is totally irrelevant since this is a City Council position, not the School Board.

    The part about the environment is cause for concern. He wants to put solar panels on top of city buildings and parking structures, yet there are none on his own roof and he still uses incandescent bulbs. He has that Al Gore complex going for him in that he fails to practice what he preaches.

  29. #29 by Anonymous on April 10, 2012

    Chaffee sort of made sense. He said actual costs of service should be known and paid for and nothing else. It was the first time I have ever heard Chaffee not want to tax something. I think he still wants to tax hotel beds.

  30. #30 by Anonymous on April 10, 2012

    Wait till he installs LEDs in his house and cant read the subpoena for his low-income housing projects.

  31. #31 by The Water Guy on April 10, 2012

    During the meeting Chaffee spoke about supporting a cost of service charge to the water fund that is based upon verifiable costs borne by the city for activities related to distribution of water. That could be fair except the city does not track time spent by staff or other expenses related to activities such as weed abatement at reservoirs, security responses related to water facilities, gate maintenance at wells, etc. etc. I didn’t hear him support a specialized audit to get to the bottom of it.

  32. #32 by Fence sitting Cardboard Candidate on April 10, 2012

    I’m sure this Doug Chaffee fellow is a man of very high character.

  33. #33 by Vernon Dozier on April 10, 2012

    Where does Chaffee stand on the ridiculous idea of “renting” City-owned property used by the water department?

  34. #34 by truthseeker on April 10, 2012

    I wonder where Doug Chaffee was standing every Saturday while the protests over the brutal murder, and frame ups by the police department were in full swing? Where was he standing at the city council meetings as the public was enraged as our elected leaders (EXCEPT BRUCE) remained silent? Did I miss something or did he just get back from vacation?

  35. #35 by Vernon Dozier on April 10, 2012

    Doug is a liberal, but an elitist liberal just like Jan Flory.

    Associating with the common folks is beneath them, unfortunately.

  36. #36 by truthseeker on April 10, 2012

    Vernon Dozier :
    Doug is a liberal, but an elitist liberal just like Jan Flory.
    Associating with the common folks is beneath them, unfortunately.

    It appears to be the case unless it is for photo ops for his campaign. Fullerton needs leaders with a moral compass and a spine. We already have three blind weather vanes and one upside down flag that all blow with the prevailing winds.I cannot wait for June.

  37. #37 by admin on April 10, 2012

    merijoe, I screwed up and forgot to remind and ask our great camera crew to film this event. My bad.

  38. #38 by Anonymous on April 10, 2012

    The next question is; will it pass?

  39. #39 by better days ahead on April 10, 2012

    It was interesting to notice how nervous Dick Jones looked when Mayor Sharon Silva announced that she was calling for and audit of the water fund.An audit may have brought the reality of the money directed towards pensions and such and would have certainly been a great boost for the recall effort. If anything is worth protesting besides the usual protesting it would be to demand an accounting for where the money went. The council members better speak up or face recal.We demand it.

  40. #40 by The Water Guy on April 11, 2012

    You are so right. During the adhoc committee on Monday, the water dept. manager admitted that they transfer 10% of the water bills directly to the general fund where it is “evenly distributed.” In other words, the city does not dedicate or target that money to things related to general fund items that are used to provide water service. So you can safely bet that water funds are paying for pensions of non-water related persons. That is why people are right to ask about assumptions and calculations made by the city’s finance consultants that produced the water rate and fund studies as well as the data dump on the adhoc committee the city manager is arranging in 2 weeks… and demand a formal audit

  41. #41 by Evry things just Shell on April 11, 2012

    So, again, theya re going to hire an outside consultants, to come in and get the facts and figures fromourpeople, so they can do a report? What the hell? I can take info from a spread sheet and calculate,why are we doing this again? O riiight, so they can steal months of monies,keep draggin it out boys and girls-your careers are flailing-its fun to watch-watching you lie and lie and steal,do you think we dont get together and wonder where our money goes? Mr Bankhead, can I go to your sons house and get that wave runner paid by our monies? Can I? Or can I go to your house and try to citzens arrest your old wife? Sound fair,you did it to the recallers,why not your wife,who is aiding and abbetting in your illegal activities? O blankhead

  42. #42 by Just the facts, ma'am on April 11, 2012

    “a fact-based answer”

    In Fullerton? Hahaha. We deal in feel-goods and emotions here. Facts are neither wanted nor addressed.

    Bankhead wouldn’t know a fact if it bit him in the ass.

  43. #43 by merijoe on April 11, 2012

    If it is decided to do an audit to explain where the 10% went (and it should be)

    IMO, I’m sure there are no reciepts or records.

    IMO they ( the city) receives the money in the way they usually do (general fund) and whoever is in charge reviews this new money that was put in the general fund and just dumps into accounts that he/she wants to dump it in with the blessings of, oh, insert your favorite rat bastard here.

    Maybe this is why the City attorney plays possum at council meetings whenever the 10% water tax is mentioned and why an audit is “discouraged” with some lame verbal excuse that it’s too expensive…
    (oh yeah, it is? give up the the names and phone #’s, of the people you’ve contacted regarding an audit-how about a witten report of this to the people?)

    Prop 218 specifically says these monies garnered by water bills and dumped in the general fund, better be used for water, not pensions or salaries or donuts, unless there is a special election of the taxpayers to allow this sort of use or it is illegal, been around since late 1996, and the city attorney doesnt know this? uh, yeah, he does, he’s just issuing a suspension on himself.

    Thanks for the transparency.

    http://www.caltax.org/MEMBER/digest/sep97/SEP97-7.HTM

  44. #44 by x on April 11, 2012

    The City Attorney is a boob. No, really he is.

  45. #45 by Just the facts, ma'am on April 11, 2012

    There is no need to find out where it went. It went into the General Fund.

    The salient question is how much represented actual cost reimbursement. Since the City already gets reimbursed directly for most related functions the amount will necessarily be tiny. That’s why the staff’s consultant was told to gin up fake rental values for the land where the reservoirs are located.

  46. #46 by The Water Guy on April 11, 2012

    So you would rather have the water rate adhoc committee do the audit (as is being planned for their meeting in two weeks) based upon information that is being given to them by the city manager, and allocate the cost of service accounts and amounts? The only thing that is different in this case is that staff is handing the information to the citizens committee instead of the Municipal Financial Services Group. If you can do this “audit,” assess the cost of service, cull off the staff fluff, in 2 hours on Monday night, April 23, I hope you show up to show the rest of us how it’s done.

  47. #47 by nipsey on April 11, 2012

    TIme to sue the city if they decide to proceed with an amateur hour non-audit and start making shit up.

    Gee, the costs of a real audit don’t seem so onerous now..

  48. #48 by The Water Guy on April 11, 2012

    You are right on target Nipsey. We are in this mess because it’s all being made up as we go along. The residents of Fullerton have a chance to this right and I’m hoping the water rate adhoc committee will not take Felz’s DIY audit workshop seriously and cut to the chase and vote to recommend a specialized audit. If the adhoc committee takes the DIY approach we might as well hire Robert Rizzo to take Felz’ place…Felz has been around for a year of amateur hour…Rizzo at least lasted a decade before they caught up to him…and we might get a park or two out of him.

  49. #49 by The Water Guy on April 11, 2012

    BTW: Rizzo is the former city manager of Bell.

  50. #50 by Citizen M on April 12, 2012

    I think Mr Felz , was placed in that position- for the very reason, he has no spine, and seems to blow in every direction the wind does…who ever is telling him, its cool Joe, just keep stringing them along, is giving him some very bad advice, maybe even jail time- dont think we didnt learn from Bell and how to make a charge stick…Mr Felz and his cronies will look great in stripes…o sigh.

  51. #51 by Lifesaving Service on April 13, 2012

    With Penalty Interest or just Interest, It becomes an enormous amount of money, after many many years.

  52. #52 by YOU GOT, GOT on August 7, 2012

    SEBORNE IS COWARD

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