Water Rate Update

Thursday evening the Water Rate Ad Hoc Committee voted and made some recommendations.

First, the Committee rescinded our May 23rd recommendation to the City Council to use Alternative A which would have raised ALL rates 7.8% or more. All would feel the pain evenly.


Second, the committee voted to recommend “Alternative B”. The Committee briefing describes Alternative B as an “Alternative rate structure using 1983 Rate Study meter equivalents for all fixed charges, increasing fixed charge revenue from 12% to 18% and adjustments to commodity charges to better reflect cost of service.”

I voted NO and Mr. Jack Dean abstained from recommending Alternative B. Regardless, Alternative B was passed.

Third, I moved to recommend that the City Council exempt from the water franchise tax all new revenue generated from this new rate structure to ensure that ALL new revenue goes strictly back into the water system. The motion was seconded and passed unanimously. There appeared to be too much opposition for recommending that the council abolish the hidden tax.

Speaking to the THREE members of the public who came to the meeting, I explained that 10%-11% (depends on who you talk to and which document they look at) of the money we pay for our water bill does not go into the water system and that the money, $2.5 million FY2010, goes into the General Fund. The General Fund does not contribute any money to the Capital Improvement Program (infrastructure) but does pay for things like parks, fire, police, special club memberships for the city, and other oddities. Similarly, the Paramedic Fee does not go exclusively to paramedics- it goes into the General Fund.

The end results of the Water Rate Ad Hoc Committee work are recommendations to the City Council. Whether or not they agree with our recommendations, we will see on July 19th at the Public Hearing.

Will Merging Water Districts Help or Harm Fullerton?

Earlier this month Terri Sforza wrote about a possible merger between Metropolitan Water District and the Orange County Water District. For years the Orange County Register has pointed out the redundant and ridiculous overlaps in these two agencies and how it makes sense for taxpayers, or rate payers depending on your view of payments to government bureaucracies.

How much money would be saved by such a merger seems to be open to debate but Sforza thinks at least $1-million right from the start.  Putting the $1-million in perspective, Sforza notes that it is just a drop in the $300-million revenue bucket for the agencies.

What could go wrong?

Currently, the Orange County Water District is a “member agency” of the MWDOC.  These multiple layers of bureaucracy removes the people, water users and voters, further from the decision-making table.  Perhaps a merger will bring Fullerton voters and water users closer to the table of managements’ fiduciary responsibility to the people they serve.

As it stands, Fullerton voters get one single vote from Mayor Pro Tem Don Bankhead who represents Fullerton voters on the OCWD Board of Directors.  That is one vote out of ten cast on each issue before the Board.

No one knows what a merger will mean for Fullerton.  All we can do is wonder if a bigger water agency equates to a better water agency for those who foot the bill.  If history has taught us anything it is that bigger government is not better government.

REMINDER:  The Water Rate Study Ad Hoc Committee’s last meeting is tonight at 6:30PM at Fullerton City Hall.  Don’t be shy, we’re in this together.  Speak now or pay later!

The Water District’s $571,400 Ethics Office

Metropolitan Water District of Southern California is spending $571,400 to fund their internal Ethics Office according to the approved 2011 budget.

Sometimes you've got to ask yourself "why?"

According to the District’s website, the Ethics Office “helps maintain an ethical culture at Metropolitan by enforcement of ethics-related rules and laws; education for directors, officers and employees; and enhancement by promotion of the District’s six core values.” Are MWD employees so unethical that they need this office?  Maybe, but they don’t seem to be doing a very good job of educating employees and board members.  I vaguely recall an attempt 2 years ago to get a 25% retroactive pension spike.

That’s $571,400 to “help maintain an ethical culture”.

The funds pay for one Ph.D. and two others identified as an educator and an administrative liaison.  With failed overhead like this, it is no wonder the MWD Operations & Maintenance budget projects an 18.4% increase in salary and benefit costs as well as a 23% increase in construction related costs and a 23% increase in Water System Operations!

It’s also no wonder why Fullerton’s water rates are anticipated to nearly double.

This Monday, May 23rd, the City will be holding a public meeting with an ad-hoc water rate committee in the City Council chambers at City Hall (303 W. Commonwealth) at 6:30PM.  I encourage ALL Fullerton water users to attend.  You will be given an opportunity to voice your concerns and let committee members know where you stand.

If you would like a copy of the Fullerton Water Rate Study Ad Hoc Committee Briefing, please email me at GregSebourn@yahoo.com and I will email it to you.

Fullerton Water Rates – Disgust, Distrust, Anger, and Fear

Last night’s Fullerton City Council meeting brought out a number of people concerned that their water rates will be going up.  I would like to thank each and everyone of them for taking an active interest in our City!  A few of them stood and spoke before the council and many approached me after the meeting.  They expressed a wide range of emotions and sentiments.

Disgust. Distrust. Anger. Fear.

There was the universal disgust that goes with the realization that Fullerton’s leadership has been absent for decades.  There was the feeling of distrust that comes when someone feels they have been lied to about where the money goes.  Many were angry that this report was not commissioned decades ago.  Then there was fear.  Many are fearful that the few businesses in Fullerton who are heavy water users will soon pack up and head out of state to more business-friendly areas.  Others are fearful that they will have to leave, unable to afford the higher costs.

Those who sat through the 2-1/2 hour meeting observed many things.

Most notably, at least one councilman had serious trouble staying awake for the meeting.  Death by PowerPoint I believe was the cause.

Mayor Jones repeatedly used Hitler as some sort of misplaced analogy to the gross mismanagement of our water system for nearly a century.  There were several people who were clearly disgusted with his remarks.

Mayor Pro Tem Bankhead, who is a representative for the City on the Orange County Water District Board, bragged that the board hasn’t raised their tax on the City’s pumping efforts in a year even though a few key executives received raises.  OCWD charges Fullerton taxpayers somewhere in the neighborhood of $236 per acre-foot of water that the City pumps.

The franchise tax was mentioned several times.  I pointed out that the tax should be eliminated completely which would allow the City to NOT raise water rates AND address the urgency of the neglected system.  I did misspeak on one key matter.  Specifically, I said that it would be better for the general fund to take the 10% hit rather than the taxpayers.  Actually, the water utility franchise tax ($2,474,860 FY2011) accounts for about 1% of the total budget ($180,802,880 FY2011), not 10%.  Cutting the franchise tax would increase the water fund from $27,728,430 FY2011 to $30,203,290!

So, the bottom line is that we have the funds to fix the water system but the City Council will need to adjust the City’s priorities.

Those in land development, engineering, construction or anyone else who rides Fullerton’s roads knows that the City’s priorities are out of order.  City Hall places too much emphasis on housing and transportation boondoggles while ignoring the skeleton and muscle of the City’s infrastructure.  It causes me to question whether or not our City leaders (are there any at City Hall?) have planned for repairing and replacing our roads.

Those interested in protecting the City’s infrastructure from further neglect while protecting the pockets of taxpayers are urged to attend the Water Rate Study workshops in the coming weeks and months.

91% Water Rate Increase, WTF Is Next?

Let’s hope the city council comes to its senses and votes NO on raising our water rates and associated taxes 91% over the next 10 years. Friends, I’d like to thank Greg Sebourn for bringing this issue to our attention. As many of you may remember, Greg ran for Fullerton city council last year and received 6,375 votes. Here is Greg’s take on the proposed rate increase:

Fullerton Water Rates to Double

This Tuesday night the Fullerton City Council will direct staff on the implementation of a water rate study.  Based on the proposal from the City’s consultant, Municipal & Financial Services Group (MFSG), the new rates will be increased by 10% for 5 years then 3.5% for another 5 years amounting to a 191% increase by 2021.

The reason for the tax hike is clear.  MSFG says, “It should be noted that the planned spending on mainline replacement over the projection period is significantly more than the City has undertaken in the past. At a cost of approximately $190 per linear foot of line the City plans to replace approximately 6 miles of mainline per year at a cost of over 6 million per year.  At this pace it would take the City 400 years to replace the entire system (which consists of approximately 420 miles of pipe).”

MFSG’s proposal spells out how exactly we got into this mess in the first place.  Unfortunately, this proposal and the implementation should have been undertaken decades ago.  Oddly, the proposal notes that the City could just ignore the problem (like they have been doing for so many years).

Read the rest of  “Fullerton Water Rates To Double”

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?

gimme, gimme, gimme
gimme, gimme, gimme

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.

well don't just sit there, go get it
"There it is. Take it."

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!