Department of Water Resources
A daily compilation for DWR personnel of significant news articles and comment
June 11, 2009
1. Top Item–
Water district officials: Will state repay us?
Riverside Press-Enterprise-6/10/09
By Janet Zimmerman
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Water rates would likely increase under a state budget-balancing proposal to borrow $2.1 billion in property tax revenues from cities, counties and special districts, local water officials said.
Gov. Arnold Schwarzenegger wants to use the money to help close
But the state's legislative analyst has suggested taking more than 25 percent from water and wastewater districts because they can raise rates to recoup the money. It would result in a hit of at least $500 million to those districts, according to the Association of California Water Agencies.
Losing 25 percent of property tax revenue could result in a rate hike of about 10 percent for customers of Eastern Municipal Water District in Perris, said Chuck Rathbone, the district's chief financial officer. It would follow a February increase of 6.2 percent, which cost most customers about $2.71 per month, and a new tiered-rate system that penalizes customers who go over a set water budget.
"The state says water and sewer special districts can just raise rates. It's true, but is that the right thing to do?" Rathbone asked.
Other districts said rates likely would increase if the state borrows the property tax money, but they didn't have estimates of how much.
A legislative vote on the Prop 1A plan, and the percentage to be taken from water agencies, could come as early as Monday.
The state plan would force water agencies to defer maintenance on aging facilities and miss debt payments on projects already completed, officials said. At the same time, the agencies are under pressure to develop new water sources in the face of drought and other supply challenges, they said.
"We're trying to repair and maintain existing infrastructure ... things that are serving real people right now. If we don't maintain them we could likely have a big problem because doing it on an emergency basis costs a lot more," said Randy Van Gelder, general manager of the San Bernardino Valley Municipal Water District.
Water officials said they fear the state will take the money and not pay it back.
At a news conference this week, the governor acknowledged that everyone will feel the pain this budget year.
"There hasn't been one single group that has come to us here that was pleased with the budget situation. Nor are we, may I remind you. I'm not pleased with the budget situation and no other group is," Schwarzenegger said.
Van Gelder's district has prepared two budgets for the next year, one reflecting no tax shift and one with $4 million less, based on a 25 percent cut in property tax revenue.
If the money is taken, it will mean at least one of the district's major pending projects -- a system to route State Water Project supplies to the Rialto-Fontana area or shoring up a Highland-area pipeline exposed by storms -- will be put on hold, he said.
The Yucaipa Valley Water District stands to lose $2.5 million to the state if special districts take a 25 percent hit.
Debt payments are due in August on the district's already completed filtration plant; the payment could be late if the Legislature doesn't make a decision soon, said Joe Zoba, the general manager.
The district also may not be able to raise rates in time to cover the loss because it is legally required to give 45 days notice to customers before an increase, he said.
Eastern would be one of the hardest-hit districts. It would give up $5 million to $16.5 million, depending on whether special districts have to give up 8 percent or 25 percent, Rathbone said.
The district already scaled back its five-year capital improvement program from $1 billion to $750,000 because of the economy and limited growth. But many of those projects, primarily wastewater treatment, will be put on hold, he said.
"The state should get their finances in order and not put it on the back of the public trying to balance their own areas of responsibility," Rathbone said. "If we can rely on the state paying us back and it really is a loan, we can live with that. But it's the uncertainty." #
http://www.pe.com/localnews/inland/stories/PE_News_Local_S_taxes11.3fa2264.html
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