Category: The Crime Beat

UPDATE: Of course the comment from “Do the math” is right on the money. The 10% in-lieu fee is defined as a percentage of gross revenue – including the in-lieu fee itself! This tricky little dodge adds 10% of the 10% – an add-on of yet another 1% to the cost of your water bill! Uh, oh! Quadruple dip!

– The Desert Rat

Way back in 1970 the Fullerton City Council passed Resolution No. 5184 dictating that 10% of the gross revenue collected by the Water Department was a reasonable amount to cover ancillary costs from supporting City departments. Here’s the key language from the Resolution:

That an amount equal to ten percent of the gross annual water sales of the Municipal Utilities Department during the fiscal year ending June 30, 1970 is hereby transferred to the General Fund in payment for the services of the Finance Department of the City and of the City Administrator, the City Attorney and the City Clerk to the Municipal Utilities Department of the City as a part of the operating costs of the waterworks system of the City during the fiscal year ending June 30, 1970.

That at the end of the fiscal year ending on June 30, 1971 and at the end of every fiscal year thereafter, a sum equal to ten percent of the gross annual water sales of the Municipal Utilities Department of the City shall be transferred to the general Fund of the City in payment for the services, during such fiscal year, of the Finance Department of the City and of the City Administrator, the City Attorney and the City Clerk to the Municipal Utilities Department of the City.

What sort of justification proved that 10% of the water revenue in 1970 should have gone to the General Fund is anybody’s guess.

In 1982 the City Council passed an ordinance permitting itself the authority to collect an “in-lieu” fee from  the water utility as a fixed percentage of revenue. Despite the name change, the City continued to add the historic 10% to Fullerton’s water bills, and rake it off directly into the General Fund – without so much as a second thought.

A bit confusing? Not really. The original justification for the fuzzy 10% figure was to reimburse the City for vague incurred costs; calling it an in-lieu fee never changed the inescapable fact that the 10% amount was supposed to pay for actual costs associated with running the waterworks. Either way, as of 1997 and the implementation of Prop. 218, that became illegal.

Flash forward to today, and peruse this year’s budget documents. The Water Fund is Fund 44. Check out the total column on the right.

Summary of Appropriations by Fund.

Notice the amount directly allocated in the 2011-12 budget to the City Manager and Administration: $1.7 million ($29,917 + $1,678,962).

Now let’s see some actual charges. Observe Fiscal year 2009-10, over there, in the left column.

Summary of Expenditures and Appropriations by Fund

Good grief! As you might have guessed (based on this year’s budget), in 2009-10 the City directly charged the Water Fund over $1.5 million for the City Council, City Manager, and Administrative Services; plus fifty grand for Human Resources, and $100,000 for Community Development!

And this means that those services that were originally being used to justify the 10% levy on our water bills are already being charged directly to the General Fund. Double Dip!

Of course it gets worse. We now know the 10%  is a double dip; but hold on to your water bill. Because the directly charged costs for “administration” are considered part of the base waterworks cost; the automatic 10% in-lieu fee (which was supposed to pay for “administration” but that pays for nothing), is applied to that! That increase this year is at least $170,000, if you add 10% to that $1.7 million figure we saw in the first table. Triple Dip!

And that, Friends, is a triple gainer off the high board and right into the deep end of the pool.