Santa Clara County
– Customers of the Santa Clara Valley Water District are facing
drastic rate increases next year as the district scrambles to
recoup the nearly $51 million in property taxes it will lose to the
state over the next 17 months.
Santa Clara County – Customers of the Santa Clara Valley Water District are facing drastic rate increases next year as the district scrambles to recoup the nearly $51 million in property taxes it will lose to the state over the next 17 months.
“It’s almost inevitable,” Stan Williams, the district’s Chief Executive Officer said Monday. “But we haven’t accepted that this is our fate.”
The district was expecting to hand over some revenue to the state under a two-year deal cut between Gov. Arnold Schwarzenegger and local districts to help balance California’s education budget. Under the deal, cities, counties and special districts are all giving the state $350 million each of the next two years, in exchange for protection against future payments. Proposition 1A, passed earlier this month, strengthened that protection.
But when the bill arrived last week, it was much larger than expected. In fact, the water district is paying more than any other special district in the state.
The official explanation is that the district is large and it gets a lot of revenue from property taxes, the only income stream the state has access to. While no other district is paying as much, many are handing over to the sate the same 10 percent of their revenue.
Also, the water district is an enterprise district, and the logic in Sacramento is that a district that charges for its services can afford to pay more.
“When the legislature was crafting the formula, they felt like enterprise districts could make it up by raising rates,” said Geoffrey Neill, a deputy public affairs specialist with the California Special District Association. “They have the excuse that the legislative intent of a bill passed 25 years ago was to wean districts off property tax.”
Passed after the adoption of Proposition 13, Assembly Bill 8 gave the state access to local property taxes, and Neill said the state has taken in excess of $5 billion annually ever since, even in the surplus years of the late 1990’s. Prop. 1A will limit the state’s ability to seize local funds, but it will retain rights to the $5 billion.
“That was clearly not the intent of Prop. 13,” Neill said.
And Williams said that his district is being charged unfairly because it is a mixed-use district. It charges for its water supply services, but it’s flood control programs are non-enterprise, meaning it can’t pass on the costs to consumers.
“Coordinating functions was very important to the county, and we’re being punished for forming a larger district, which is encouraged by the state,” Williams said. “There are larger districts that aren’t paying anything because they’re non-enterprise.”
Meanwhile, the southern California Metropolitan Water District, a district with revenues twice that of the SCVWD, is losing only a million dollars because that’s the extent of its property tax earnings.
Williams said that meeting the immediate shortfall would have required a half-year increase of 30 to 40 percent. The board of directors dismissed that option last week, but intends to cut flood-control programs and cut 90 job openings from the budget.
Still, he suspects a significant rate hike to take effect next July 1, troubling news to South County residents who are still reeling from last year’s 25 percent boost, compared with North County’s eight percent.
“They’re hitting ratepayers too hard,” said Bob Cerruti, a San Martin resident who spent three years on a district flood control advisory committee. Cerruti resigned in protest earlier this year when he learned of SCVWD’s new retirement plan that pays vested employees 70 percent of their final salaries. The district employees about 900 people to serve 1.5 million water users.
“They have oodles of money,” Cerruti said. “They have so much damn money they run all these program over and above what they’re supposed to be doing. Apparently, the board has given carte blanche to rubber stamp the budget year after year with rate hikes,”
Williams is aware that his district’s reputation has suffered with South County customers, but stressed that North County well owners pay twice as much as their South County brethren. He said an outside auditor will examine the district next year to find ways to save money.
“We’re aware of that reception,” Williams said, “and we’re trying to be responsive to it.”
