Will initiative spur sewage spill?

MAY 25, 2010

By KATY GRIMES

Cities all over California are attempting to “increase revenue” to make up massive budget deficits. “Revenue increase” is government code language for tax increases.  But residents in some cities are doing something to prevent this.

Last June when the Sacramento City Council imposed another utility hike on its citizens – this time a 19 percent hike – the local taxpayer group and some concerned citizens decided to put an end to this line of thinking. At a time when residents are struggling to hold onto their homes and local businesses are closing their doors at record rates, Sacramento residents decided to fight back.

On May 21, the “Campaign for Common Sense Utilities Rates,” a non-partisan, grassroots organization formed to win passage of a utility rate rollback initiative. This past week the group announced the filing of initiative petitions bearing more than 12,000 signatures – twice the 5,420 signatures legally required to qualify the Utilities Rate Rollback Initiative for the November ballot.

In the past nine years, rate hikes approved by the Sacramento City 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.

Craig Powell, chairman of the Campaign for Common Sense Utilities Rates, explained how this has been allowed to happen: “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.”

Powell explained that the initiative will have three results: First, it will cancel a 9.2 percent rate hike that will go into effect on July 1, 2010.  The 9.2 percent rate hike will be canceled effective July 1, 2011.  No refunds will be available, however.  Second, it should effectively freeze city utilities rates for a one-year period (July 1, 2011 through June 30, 2012).  Finally, it will permit the Sacramento City Council to increase rates in future years to cover increases in the U.S. Labor Department’s consumer price index.  The City Council would have to obtain voter approval to either amend or repeal the measure in order to increase rates by more than the increase in the CPI in the prior year.

Based on projected rates of inflation and anticipated future rate hikes if the initiative is not passed, the group projects that the typical Sacramento homeowner will save $101.40 in the first year following passage of the initiative, $159.96 in the 2nd year, $217.32 in the 3rd year, $265.20 in the 4th year and $316.80 in the 5th year, for a five-year total savings of $1,061.  By the 10th year, they project that the annual savings will amount to $725 per year and the cumulative 10-year savings will amount to $4,300 for the typical homeowner.

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

Answering claims that the utility department will have less money coming in, Powell said that 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.

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 more than $21 million in utilities funds to spend on general government in direct violation of Prop 218. The Howard Jarvis Taxpayers Association 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.

Interestingly, according to Powell, in Sacramento in just the past 30 days, the Solid Waste Authority (made up of Sacramento City Council members and county supervisors) has rejected a general rate increase as well as a large increase in franchise fees charged to commercial trash haulers, both by lopsided votes, with every Sacramento council member voting against the hikes.  It is clear that the initiative is already having a notable effect on the behavior of our local elected officials.

Many cannot recall any measure ever qualifying for the ballot as rapidly as this one has — just 64 days from campaign kick-off to filing.  And the campaign did this with an all-volunteer force.

The registrar of voters has 30 business days to validate the signatures.  Once the registrar issues the certificate of sufficiency to the city, the council can elect to order a 30-day (calendar days) fiscal study of the expected impact of the initiative and the council has a further five calendar days to consider the report before they are legally obligated to order the initiative on to the November ballot.

Expecting some future drama with the effort, Powell said, “You can count on the Department of Utilities to issue a report saying that if our initiative passes, we will soon see a flotilla of turds floating down Capitol Mall.” In expectation of such a move, campaign volunteers created a betting pool that the Sacramento Department of Utilities will have a major sewage spill two to three weeks before the election.

Let’s hope not.

Repeated calls and emails to the utility department were not returned.

CORRECTION: The Campaign for Common Sense Utilities Rates did in fact, use paid signature gatherers in order to meet the ballot qualification deadline. The campaign however, is run by an all-volunteer group.