The Fate of the Water Tax

The current city councilmembers (or at least a majority of them) have finally agreed to meet quickly on Monday morning for the sole purpose of certifying the results of the recall election. Once that’s out of the way, the three new councilmembers will be sworn in unceremoniously by the city clerk during the day on Monday.

Why skip the usual pomp and circumstance? Because there’s urgent business to take care of.

The new council has called a second special meeting for Tuesday evening to immediately deal with the collection of the 10% in-lieu franchise fee on water bills: a tax which was called illegal by the Howard Jarvis Taxpayers Association over a year ago, yet still persists today.

And so at their first meeting, a fresh city council will finally have a chance to eliminate the water tax entirely – a fee that was never properly authorized by taxpayers under Proposition 218 and was illegally diverted to the general fund to pay for non water-related costs (primarily salaries and pensions) for the last 15 years.

There are probably a lot of residents who wouldn’t be sad to see it go.

Water Tax Scofflaws Admit Guilt

Last night Councilmembers McKinley, Bankhead, Jones and Quirk-Silva finally admitted what the rest of us had been saying all along: the City of Fullerton’s in-lieu franchise fee is illegal, and has been for the past 15 years. After blowing off the issue for nearly a year (and really, a decade and a half) the city council was forced to suspend the fund transfer that went to pay for General Fund expenses.

Here is Doc Jones’ befuddled admission:

Note that the angrified and bewildered Jones believes that part of the 10% tax maybe had something to do with water delivery. Wrong. It all went to the General Fund to help pay for pensions and four-star hotel room junkets by Jones himself. The water infrastructure and repairs were never paid for out of the General Fund, either. That’s just more confused claptrap from Jones.

And by no means was the tax repealed last night. In fact, the fee will show up on your water bill next month, just as it always has.

Councilman Bruce Whitaker said it very clearly: the franchise fee was collected from ratepayers illegally, was never properly authorized by taxpayers under Prop 218, and needs to be completely thrown out altogether. Deficiencies in the water fund do not change this simple truth, and those shortcomings should be addressed separately with the full notification and approval of the public.

When the tax is finally repealed by a fresh city council, don’t forget that there are millions of illegally-taken dollars that still need to be refunded to water users.

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.


Why Didn’t Norby Speak Up On Fullerton’s Water Tax? He Did.

Back on May 6, 1997 a resident named Tom O’Neill told the City Council that he opposed the practice of transferring money from the Water Fund to the General Fund.  O’Neill said it’s deceptive and builds mistrust in elected officials.  Then Mayor Chris Norby noted that the City attorney was reviewing this issue and would report on it at a future meeting.

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Then, in September of 1997, the Water Fund issue rises again as the priorities for Hill Crest Park were being considered.  The Water Fund and Redevelopment Fund were being eyed as the primary funding source.

The City’s consultant tried to explain why these funds could be used.  His logic?  If a new waterline and reservoir were to be installed, many of the other park improvements could be logically tied to the water work.

Marie Whaling and Barbara Marr asked questions about the use of Redevelopment Funds and Water Funds for the park.

Mayor Norby explained that Redevelopment Funds were to be used for alleviating blight.  He went on to say that the concerns expressed regarding funding sources are legitimate and that Water Fund monies are for water purposes and expenditures must be related to water and its delivery.

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Water Wars Continue

Running for higher office.

Teri Sforza of the OC Register has done another piece on Fullerton’s fraudulent 10% water tax and the equally fraudulent study commissioned by the City Council to justify keeping as much of the tax as they can. Naturally the consultant ginned up some phony rent value for City owned property that water reservoirs sit on! In fact the bogus rent topped $1.3 million, a figure so absurd that even Mayor Sharon Quirk took offense. It’s a good thing Ms. Quirk is running for the State Assembly or she might not be so concerned about the wear ratepayers getting ripped off in an illegal scam. Whatever. At least she finally seems to have somebody who knows what’s going on advising her.

New Water Tax: 6.7%? Not a Freakin’ Chance!

Apparently the much-anticipated Joe Felz Water Study is in, and it says that the illegal 10% water tax is…drum roll, please…illegal. But get this: rather than an honest study, the consultants were clearly told to gin up as much plausible reason to keep as much of the 10% as they could. The result? It’s only 6.7%. Yay!

The only problem is that to reach 6.7%, the consultant cooked up the idea that the Water Fund owed the City rent on land where water reservoirs are located! According to Ad Hoc Water Committee member Greg Sebourn, the total annual rent was figured at $1,374,000 – well-over half of the existing tax.

Of course this scam raises all sorts of new issues, as scams generally do. Such as: the reservoir in Hillcrest Park supports a play field on its deck. Does the City rent this back from the Water Fund? Bet not! The reservoir up at the top of Euclid is situated in a cactus patch patrolled by goats. What’s the rental or development value of a nature park? I dunno, but it’s not much. Has the Water Fund been paying for maintenance on these properties that should have been the responsibility of the General Fund? Bet so.

Then of course there’s the issue of whether the waterworks itself paid for fee title to any of these properties in the first place, a way back when. I wonder if the consultant even bothered to check. Bet not.

And there’s the embarrassing fact that there is no arm’s length relationship between the people that impose the rent and the people that pay it. The City Council can demand any amount of rent they want – then agree to pay it. Why not? The proceeds go to pay their own pensions! Now, that’s not very good, is it?

In any case, the public may find it a bit confusing and unseemly that at the eleventh hour the bureaucrats and their hand-picked consultant are burning the near-midnight oil to drum up ways to charge as much for water as they can that they can keep siphoning money into the General Fund.

Will you please shut up.

Will the city Council buy into this load? Well, of course they will. The vote will be 4-1, and it will be up to the citizens and voters to rectify the scam at the ballot box.

Our job is to continue to expose the fraud for what it is.


Felz Blows Off the HJTA. Illegal Water Tax Ripoff Continues. Lawsuit Imminent.

The Howard Jarvis Taxpayers Association fired off another pithy letter to city manager Joe Felz last week, accusing him of intentionally delaying the termination of the illegal 10% in-lieu water franchise tax while continuing to collect over $100,000 per month from Fullerton residents in violation of the state constitution.

The letter states that Joe Felz verbally admitted to the illegality of the fee and promised action within a certain timeframe. But honesty is not a virtue within city hall, and nine months later Felz and his trusted council majority of Bankhead, Jones and McKinley still allow the city to continue its theft without comment or remorse.

Mr. Bittle closed out his letter with a threat of a class action lawsuit that would seek a refund on behalf of all Fullerton water users. As one of the 135,000 ripped-off residents, I’d say that’s a great idea.


The Shameful Water Triple (Er, Quadruple) Dip

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.



Your Tithe is Man-dated At The Altar of The Almighty Bureaucrat

The upkeep just kept getting more expensive...

Everybody who goes to church is familiar with the concept of tithing – literally giving one tenth of your income to support the church and its good works. Of course the act is voluntary.

The people who pay for water from the Fullerton Water Works have been paying a tithe, too. You see, since 1970 the Citycrats have decreed that ten percent of the cost of a monopoly supplying you with water will be added to your bill, and then be immediately re-directed to the City’s General Fund.

In the early days, when water was dirt cheap it was a way to help pay for certain indirect costs of employees who were considered overhead support for the water works. It was called an “in-lieu franchise fee” like the ones the City charges other utilities to operate in Fullerton. Still, there was an immediate problem that nobody addressed: it was bad management, and bad accounting, and opened the door for all sorts of abuse. Decades later, in 1997, Proposition 218 was passed that specifically addressed the scam of governments charging “fees” that were nothing more than hidden taxes – just like Fullerton’s 10% in-lieu fee. It was now required that fee amounts be established through objective supportable analysis that was conducted transparently, in the light of public scrutiny. No longer could governments legally charge for more than any service was worth.

But Fullerton did. For 15 years the City continued to charge, then rake off a ten percent tribute from the Water Fund that went to pay for things like pensions and pay raises for all Fullerton city employees, stuff that had nothing to do with providing water to you. Not only did the city councils know about the scam, they heartily approved the slight-of-hand, year after year.

Meantime, the cost of water skyrocketed, increasing nearly 350% between 1997 and now, jacking up the illegal tax from $700,000 a year in 1997 to over $2.5 million a year now. That’s a rate of about 23% a year, just in case you’re inclined to keep track. A staggering total of almost $27 million has been surreptitiously extorted from you since Proposition 218 went into effect.

Those who support this cheapjack end run think it’s right and proper for you to pay this tithe without your knowing it, and without your consent. After all they’ve had plenty of opportunity to insist, at least, that notification of the 10% diversion be made on each water bill. But they never have. And that’s because their first priority is continue funding six-figure pensions, automatic raises for employees, and all the other things that constitute business as usual in their Church of The Almighty Bureaucrat. It’s their church, and as far as the High Priests and pharisees are concerned, you taxpayers can just sit in the back pew, way, way back there in the dark, and keep your mouths shut.