Other cities could follow Sac utility measure

Feb. 15, 2010

By KATY GRIMES

In the first of its kind in the state, the Sacramento County Taxpayers League filed a ballot initiative to roll back monthly utilities rates. Filing Wednesday February 10, 2010 at the Sacramento City Clerk’s office, the Tax League announced that it will start gathering signatures for the initiative in early March and is seeking to qualify the measure for the Nov. 2, 2010 general election ballot.

“This measure will put the Sacramento Department of Utilities on a critically needed fiscal diet and end the city’s current practice of treating Sacramento residents like a giant ATM machine with unlimited overdraft privileges,” said Craig Powell, a Tax League director and initiative chair.

In 1996, the Howard Jarvis Taxpayers Association (HJTA) authored Proposition 218, “The Right To Vote On Taxes Act,” which specified that rate rollback initiatives can be qualified with just a modest number of signatures. According to the HJTA, Proposition 218 “plugged a long-standing loophole in Proposition 13 by requiring localities to get a popular vote, or in some cases, permission from property owners, for fees, assessments, and other levies that operated as taxes but weren’t technically called taxes. This initiative now saves California taxpayers about $100 million a year.”

If Sacramento voters approve the measure — titled  “Utilities Rate Hike Rollback Initiative” — it would cancel an upcoming 9.2 percent hike in city utilities rates, freeze rates for a year and permit the Sacramento City Council to increase rates in the future to cover increases in the consumer price index (CPI). To raise rates by more than the CPI, the city would have to persuade city voters to either modify or repeal the measure.

The supporters of Sacramento’s utilities rate rollback initiative hope that the success of the Sacramento initiative might serve as both a catalyst and a template for utilities rate rollback initiatives in other communities and cities in California, many of which have experienced large rate hikes for municipal utilities services. “It is a huge challenge to stop jumbo utilities rate hikes from being approved by municipalities since so many cities, counties and special districts are politically dominated by public employees unions who are the principal beneficiaries of such hikes,” said Powell.

Last June, the Sacramento City Council imposed a 19 percent utility hike on its citizens at time when residents are struggling to hold onto their homes and local businesses are closing their doors at record rates. In the past nine years, rate hikes approved by the council have exceeded the rate of inflation by more than 321 percent. Since 2006, the Utility Department rate hikes have exceeded inflation by a scandalous 1,321 percent.

“The Sacramento Department of Utilities shows every sign of a department utterly out of control and getting worse by the day,” Powell added. Seven months ago, the utility department approved pay raises and fringe benefit increases to most of its employees. At the same time, the city parks department was firing 41 percent of its park workers and all other city employees gave up pay hikes and accepted unpaid furloughs.

Five months ago, the city was awarded more than $22 million in federal stimulus funds to pay for a huge acceleration in the rate of installing water meters in Sacramento, even though the city council’s principal justification for spiking rates in June was to pay for faster installation of water meters. Yet the City Council has not offered ratepayers any relief from the jumbo rate hikes after it received millions of unexpected federal dollars.

Adding insult to injury, last month the Sacramento County Grand Jury criticized city officials for diverting $21 million in ratepayer money in violation of Proposition 218 and the California Constitution.  According to the Grand Jury report, “The grand jury found that, at best, the city has not done enough to determine whether the city is violating the law and, at worst, has shifted millions of dollars in costs from the general fund to utility enterprise funds.” It also found that city officials were covering up  the illegal spending of city utilities funds. The city council thus far has not begun to investigate the matter.

According to a financial analysis prepared by a four-member Taxpayer League study group, the anticipated impact of the initiative on the Sacramento economy is that Sacramento residents and business will realize over $473 million in rate savings over the next decade, significantly increasing the purchasing power of consumers while greatly improving Sacramento’s business climate by making it a far more attractive destination for businesses.

“With municipal utilities rates exploding in communities all across California, we believe that the utilities rate rollback initiative has the potential for serving as the ‘Prop 13’ of the modern era,” Powell said.

link to the Grand Jury Report: [PDF]Sacramento County

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  1. EastBayLarry
    EastBayLarry 15 February, 2010, 17:15

    This is wrong on so many levels.

    First, if it’s the city council approving these increases, fire the bums and put some honest people in their place.

    Second, legislating rates leaves no room for the ‘for profit’ utility to operate. If this passes and they have less money coming in, will the customers recieve the same level of service? When a storm knocks out power, how long will it take to be restored with only half, (or less), of the crews out working on it?

    This whole concept is like trying to legislate pi as equal to 3.0

    Reply this comment
  2. Craig Powell
    Craig Powell 16 February, 2010, 11:57

    First of all, the Sacramento City Council, like so many local governmental units in California, are dominated by municipal employees unions who benefit handsomely and unfairly from jumbo hikes in municipal utilities rates which they engineer. In Sacramento, for instance, the municipal union that represents the largest cohort of utilities employees, Local 39 of the Stationary Engineers, was able to get the City Council to raise their members’ salaries in the past five years by more than quadruple the inflation rate for the same period, while doubling their maximum fringe benefits, leading directly to the jumbo rate hikes. Freeing local governments from domination by municipal unions is no walk in the park. We see the same dynamic at play in the Legislature.

    Secondly, the inititive applies only to municipal utilities (water, sewer, garbage, storm drainage) provided by the City of Sacramento and does not apply to “for profit” utilities.

    Finally, they will not have “less money coming in.” The initiative allows the city to raise rates to cover inflation, protecting the purchasing power of the city’s utilities budget while providing some protection for ratepayers who have been consistently abused by the domination of city labor policies and utilities rate policies by municipal unions. The initiative allows the city to raise rates above the CPI if the city makes the case to the voters that such a jumbo rate hike is justified.

    Reply this comment
  3. Bryant Moynihan
    Bryant Moynihan 16 February, 2010, 20:24

    Right on Sacramento Citizens! You are following in the footsteps of the successful efforts to roll back sewer rates in Dixon and Rohnert Park. Petaluma already has qualified their initiative for November 2010. In Petaluma the City is openly misappropriating ratepayer monies to maintain parks and storm drain systems. Shame on them. They too are aware of prop 218 and the case of HJTA vs. the City of Salinas. Who wants to sue them?

    Reply this comment
  4. John F. Hudson
    John F. Hudson 16 February, 2010, 21:59

    We in Rohnert Park strongly support this initiative. However, the article is inaccurate in saying that this is the first roll back initiative under Proposition 218. The first Proposition 218 initiative was a 2007 sewer roll back Measure in Dixon. The second Proposition 218 initiative was a 2008 sewer roll back initiative in Rohnert Park (Sonoma County). I am sorry to throw cold water on some of the excitement, but we in Rohnert Park are very proud of our roll back initiative. I have met the organizer of the Dixon initiative. He came to Rohnert Park to help us. Sacramento people can rest well knowing that this is the right thing for them to do. Proposition 218 has benefited the people in Dixon and Rohnert Park. We are confident that it will benefit the people of Sacramento as well. VOTE YES!

    Reply this comment
  5. Craig Powell
    Craig Powell 17 February, 2010, 09:38

    The situation in Sacramento is so bad that the grand jury issued a special report in January which found that the city’s utilities department illegally diverted over $21 in utilities funds to spend on general government in direct violation of Prop 218. The Howard Jarvis Taxpayers Assoc. and the Sacramento County Taxpayers League filed suit against the city a week later to halt the illegal diversions and restore the funds they took. What’s more, the grand jury concluded that city managers had been engaging in a cover-up of the illegal diversions to hide it from the city council and the public.

    Kudos to the ratepayers in Dixon and Rohnert Park for their success in reducing utilities rates and showing it could be done! I think the article author meant to say that the Sacramento utilities rate rollback initiative was the first time that folks in a city the size of Sacramento had pursued such an initiative. John and Bryant, please contact me at [email protected] to share your wisdom and experience in tackling this growing issue. Thanks!

    Reply this comment
  6. cheryl bellrose
    cheryl bellrose 17 February, 2010, 10:57

    The city of Rio Vista is being challenged as well after huge increases in both water and sewer rates over the past year. We are now paying almost $100/month in some parts of the city, while the downtown is paying about $120/month.

    An initiative has been put forth and I believe that the proponents already have enough signatures to put it on the ballot. We received advice from the Dixon SCTA as well.

    I am so glad that other cities are fighting back. There are so many problems within the rate structure proposal that violate Proposition 218 it is ridiculous.

    Some people in our town have also gone to the Grand Jury and have filed a complaint with them because of the violations.

    Reply this comment
  7. chris acosta
    chris acosta 22 July, 2010, 19:30

    Just as the California Legislature was immune to furloughs so is the DOU bureacracy unaffected by the layoff of dozens of city employees on August 6th. Sacramento citizens have the right to be fuming over the misallocation of their tax dollars but solving this problem does not start with eliminating 1/4 of it’s younger workforce (citizens will experience the cause from this effect in short time). The men and women affected are not involved in any way whatsoever with the corruption of the DOU. Yet, they are the ones who will pay the price, pinch-hitting their livelihoods so that the upper idiocracy of the DOU can emerge from the smoke unscathed and then return to business as usual. Sac citizens should be more upset at themselves for having voted in these jackals in the first place and expecting a different result.

    Reply this comment
  8. mike
    mike 7 August, 2010, 13:56

    I agree with the first statement. not only does council set the rates and negotiate the pay and benafits for the employees. they rob the fund which the department cant defend. thats why the last director got pushed out for trying too defend the funds. he is also the one who pursued the grand jury inditement. as far as the utility tax the citizens voted that on them selves un measure H if i remember by threatening police and fire cutbacks. it is the voters fault they are not happy with their leadership. vote the bums out. there was a time when all the council and mayor were volinteer positions not paid. see the picture. never blam a powerless employee for mis management

    Reply this comment
  9. mike
    mike 7 August, 2010, 13:59

    besides compare your city water rate to others. resident pays 28 dollars a month. on goldenstate water my bill is 50 dollars a month. twice that as the city and without the plated service i get from DOU

    Reply this comment
  10. mike
    mike 7 August, 2010, 14:01

    are you going after the PUC next. no utility or service provider gets to set their rates.

    Reply this comment
  11. mike
    mike 7 August, 2010, 14:05

    why dont you get on the excessive management the city has. all exempt positions took a furlough including dou. spreading miss information. and chris costa just because they are the newest employyes does not mean they are the youngest employees. do we sacrafice a few for the mass or the mass for the few?

    Reply this comment

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