Water, Water Everywhere…
The ‘ol H2O seems to be on a lot of people’s minds these days, and as ever more people wrangle over the available resource, why not?
This time of year the City of Fullerton addresses the issue of water rates it charges the users of this commodity as part of its budget voodoo. What many people fail to realize is that not only does this water revenue go to running the waterworks, per se, but that 10% of the gross revenue is siphoned off into the General Fund to pay for salaries and benefits of people who have nothing to do with the purchase and transmission of water. In the next two years the projected amount of liquid gold is projected to be over $5.3 million, a tidy sum, to be sure.
This little financial two-step is called the “in-lieu franchise fee” in which the City treats the water enterprise fund as if it were a separate utility – and milks it like a cash cow. Can anybody possibly believe that there is a direct and attributable cost to the City’s General Fund of $2.7 million a year to operate the waterworks?
What all of this means is that every time water rates are raised there is an indisputable raise in the amount transferred into the General Fund. Another apt term for this raise is a tax increase, pure and simple, disguised in this case by being included as part of a “fee.” Year after year the Fullerton City Council has embraced this cheapjack swindle, perhaps not caring that the water rate payers (including many businesses) are carrying a disproportionate tax burden. It’s enough for them that no taxes were seen to be raised.
Next time you cross paths with one of your councilmembers why not ask them why the water “in-lieu franchise fee” is so high, and ask them to justify it. If you get a cogent answer please let us know!
9 Replies to “Water, Water Everywhere…”
My understanding is that the MWD is increasing the cost of water and that the hike in fees for Fullerton residents is only supposed to cover that cost. Can you provide a link to the city’s budget showing the increase?
“The proposed rate increase will generate approximately $2,000 000 in revenue for the Water Fund in the 2009 2010 fiscal year This revenue will be used to offset increased
water supply costs.”
Have you had a chance to read any of the written objections to the water rate increase in the staff report?
Matt, my understanding is that the annual water rate increase will be pitched at the June 16th meeting.
Please note that a rate increase for whatever reason (commodity cost, transmission cost, or both) will increase the gross revenue, which will, necessarily, increase the in-lieu franchise fee transfer into the General Fund. I do not know if the City adds an “in-lieu” surcharge to rate increases to backfill the increased in-lieu diversion.
The City may not even have overtly discussed this issue yet, but the projected increases in revenue and transfer totals over past actuals is clear enough.
Well, hopefully Shawn nelson will bring this up. This sure seems like an anti-business system, especially for big water users as in the Kimberly-Clark variety.
Also, I would like to know if the City pays the water fund for the water it uses in parks and street medians, etc. If it’s “free” there’s very little incentive to conserve.
#3 – That, my friend is a great question. Why don’t you go to the Council meeting and ask it? If the answer is “yes” then ask why all the other water users subsidize the City’s usage?
You’re right about one thing – the price is always an incentive toward conservation and efficiency.
Yes, these people will approve anything so long as it’s not called a tax. Dress it up as a fee and they’ll go for it every time.
Or only faking it? Drive home the point! A fee increase is a tax increase. Get it?