From my Inbox, a press release:
Fullerton Mayor Sharon Quirk-Silva Calls For Transparency and Accountability in Water Rates
Fullerton, California, March 19, 2012
City of Fullerton Mayor Sharon Quirk-Silva is asking members of the Adhoc Committee on Water Rates to consider several factors leading to greater transparency and accountability when they meet at 6:00 pm on Monday, March 19,2012. Mayor Quirk-Silva spearheaded the formation of the Adhoc Committee on Water Rates in 2011 and her observations come after reviewing a city commissioned study about water fund transfers to the Cityʼs general fund conducted by Municipal & Finance Services Group(“MFSG”) that was released on Thursday, March 15, 2012.
“I feel that it is important that despite the anticipation of an audit of water fund transfers to the general fund, the report by Municipal & Finances Services Group is not an audit, but a study of data provided by the City. A formal audit requires a Certified Public Accountant and it is important that the Ad hoc Committee members and public understand that this study does not meet the rigors of a formal audit,” Mayor Quirk-Silva stated.
“Furthermore, I am concerned that a separate but related appraisal report by Stephen G. White, appraised the value and rent covering city facilities dedicated to the service and delivery of water based upon market rates for residential property at the request of city staff. Such appraisals for facilities dedicated to water utilities are typically appraised for their “utility value” which can be substantially lower. As presented this appraisal leads to justifying larger transfers from the water fund to the general fund than may be warranted, ” Mayor Quirk-Silva added.
“Finally, enterprise funds such as our water fund are typically governed by a fund board. Such boards review detailed financial statements related to the water utility. The MFSG study makes no reference to this which I see as a significant short-coming in the area of transparency and accountability. Thus, before taking any further steps, I urge the Adhoc Committee to advise the city council about steps that ought to be taken to increase transparency and accountability so that transfers from the water fund to the general fund are technically, legally and ethically done. I will also call upon members of the city council to join me in a motion to stop any further diversions of water revenues to the general fund until these questions are answered,” Mayor Quirk-Silva asserted.
“While this process leading to greater transparency and accountability has been difficult, I am glad that the city council supported my effort last year to create the Adhoc Committee on Water Rates. I wish to thank members of the Adhoc Committee as this process potentially continues to an acceptable solution that is fair to our residents and rate payers, while improving our aging water system,” Mayor Quirk-Silva said.
I’m going to make an observation here usually made by conservatives about the collection of taxes. Conservatives argue that if you increase efforts to collect taxes, wealthy donors will simply increase their efforts to evade taxes accordingly — and, if they are as emotionally invested in tax-avoidance as some seem to be, may even pay more money to avoid paying taxes than they would pay if they just paid their taxes. Even if caught, moreover, the advantage of high-priced lawyers may allow them to swamp the limited enforcement ability of the agency tasked with tax collection, so they still come out ahead. This is variously taken as an argument against taxation, or high taxation, or putting effort into tax collection, or for gutting IRS enforcement. If it doesn’t actually make sense to you, join the club.
Who goes down the drain with the Water Rate?
I suggest that governments operate pretty much the same way. If you cut off a straightforward path to revenue, the government will find a circuitous one. They will use the equivalent of high-powered legal help to draw out procedures and to make collection of debts, once amassed, unfeasible. By the inverse of the logic of the anti-tax collection advocates, it would be easier to just give the government its money without a costly struggle.
Critics of government waste, from the left of me to the right of Tony Bushala, can agree that giving government officials lots of money to create cushy make-work positions for cronies or to shovel funds to contributors is terrible and immoral. (It’s also hard to prevent — and to stop.) Where we might disagree is whether the operations of government that actually serve people, especially the needy and vulnerable, can be sacrificed as collateral damage in the crusade against waste.
Let’s presume for the sake of argument that the longtime Fullerton water tax — one of a series of gimmicks and workarounds to avoid the blindly wielded broad-ax of Prop 13 since a third of a century ago — was bogus from the start, illegitimate in its continuation, and remains woefully late in its elimination. (This press release doesn’t give much reason to doubt it.) If the sole consequence of the victory against the water fee is that sinecures get cut and cronies get stiffed, that’s wonderful. But how likely is that?
All glory to the victors, sure — but “what price, glory?” My sense, perhaps unfair and if so I hope soon rebutted, is that to most critics of the water tax victory is not only priceless, but costless. They don’t need and will not much be harmed by a cut in Fullerton’s city services — presuming that no further workaround can be found. My concern is whether they’ve put much thought into what will happen to those legitimate and necessary (to my taste, at least) expenditures that the city’s residents need. I appreciate that they want to cut the fat and keep the bone, muscle, and sinew — but it concerns me that, if the broad-axe slips a bit, it is not them who bleeds.
So: congratulations on the glorious win. May I know what the plan is to limit the collateral damage to the innocent — if any such plan exists?
Update, 3/21: Adan Ortega, of the Ad Hoc Water Committee, has some interesting and useful comments on this topic down below, partly noting that these (apparently inappropriate) rates were used for, among other things, repair of leaky municipal water pipes. I’ll feature one section as a call-out to whet your appetite for more:
Questions surfaced when the water rate adhoc committee convened last year with an admonishing threat by the City’s consultant that we were opening “a can of worms” in so doing. So here we are with the worms now at our feet. Frankly, I’m surprised the city didn’t shut us down at that point and thank the leading blogs for following this – and the council for bearing with us as we have pushed hard against past practices that are obviously embarrassing for everyone.
Credit where it’s due: “leading blogs” is largely if not entirely a reference to Bushala’s FFFF, which I hope will soon have a great story on how we will now deal with leaky municipal water pipes (and whether we truly do have a stark and absolute choice between fixing pipes and slashing public employee pensions.)
The collateral damage can be controlled by the City adopting a “total compensation” approach to negotiating with the bargaining units; by eliminating PERS pickups; by negotiating new retirement ages.
Pretty soon everybody will be doing it.
Thanks for weighing in, Tony; I had certainly hoped you would.
I want to make sure that I’m characterizing your position correctly and that the inferences I take from it are fair:
(1) Fullerton needs to reduce its compensation to public employees. (Question: are you talking about at the managerial and supervisory levels, or everyone?)
(2) By precipitating a fiscal crisis for the city, pressing for elimination of the water tax — whatever its own legal merits have been — allows those who want to force the city to reduce compensation as above to achieve their goal.
(3) This fiscal crisis and its resolution (a) will not reduce the quality of services that the city provides to its need and vulnerable, because you can spend much less on compensation for the same quality of employees with the same quality of workload and still get comparable services, or (b) it will reduce the quality of such services no one who matters cares much about that, or (c) may have implications on such services, but we never really bothered to think that part of it through.
(1) and (2) seem like a given. What’s your perspective on how to complete sentence (3)? I won’t even hazard a guess.
To my knowledge the City doesn’t provide any services to anybody that could be deemed “vulnerable” unless one would want to stretch the meaning of the word way out of shape.
Would it affect your thinking at all if the city did provide services to the vulnerable?
(By the way, I would consider children and the elderly to be vulnerable. Public elementary education is “a service to the vulnerable” but I presume that it’s budgeted separately.)
So, by default, I think that your answer would be (a), with a fallback position if you’re wrong of (c). Please correct me if I’m wrong.
I try to avoid answering hypothetical questions.
OK, here’s a non-hypothetical one: are there any useful city services that you are concerned about losing funding given the curtailing of the water tax? “No” is a perfectly good answer, if that’s the case.
Fullerton’s City Services (at least ones listed on the city’s relevant web page, not all of which appear to actually be funded by the city) are not all that hard to look up, actually, though this list would certainly be better if accompanied by line item expenditures:
All of these services have their own links on the city’s page, for those whose curiosity about Fullertoniana is insatiable.
As you can see, services to the “vulnerable” (humans and animals) proudly provided by the County of Orange.
Yeah, just youth, elderly, and poor people (whose lives and health might be preserved by, say, proper building inspections.)
If you really think that the Fullerton government does nothing worth worrying about, then celebrating this blow of the broad-ax — as opposed to a budgetary scalpel — makes sense. But do you? If you don’t, I would expect to see some “the ensuing cuts shouldn’t touch XYZ” commentary on your part, which I don’t think that I have seen.
I never said they didn’t do anything worth worrying about.
The issue was the word “vulnerable,” a virtually worthless term used in the context of Fullerton city government.
And I didn’t assert that you did think that, Tony. I said that “if” you did, then you shouldn’t mind cutting revenues with a broad-ax. But given that you apparently don’t think that the City government does nothing worthwhile, you presumably wouldn’t be happy to see slashing and poorly aimed cuts to the city’s budget.
So: what’s the plan for maintaining whatever city services you think are worthwhile in case you don’t get the grand “Total Compensation” reduction plan that you have in mind? I’m sure that you have to grant the logical possibility that it won’t happen, right?
My sense from your writing is that, while you’d regret the loss of some worthwhile city services, you really don’t have skin in the game when it comes to their preservation. If those services get cut as a result of this win, then that’s just another atrocity that can be used to rally for the reduction of public employee compensation.
If I’m misreading you here — and this is just my impression, not a definitive assertion of what you believe — I would welcome your clarifications.
*”Water water everywhere and not a drop to drink!” Mirage is definitely the word when you start an Ad Hoc Committee to discover that the Regional Water supplies are low because of draught or because water rates have risen do to increased demand and useage. In Huntington Beach the big news is that a Desalination plant is being fought by a compendium of enviro’s that think plankton are living creatures that feed the passing family of whales on a annual basis and that Desal kills these little guys because of the heat. Anyway, HB needs the Desal plant, Orange County needs the Desal Plant and cities throughout the Southland….need the additional water that is not being Reclaimed with the Toilet to Tap Fountain Valley Facility.
Get the point guys…..this is totally a “Halley’s Comet Argument”. Oh, those huge pensions are cutting in to our ability to buy water! This Fullerton Mayor needs a good Consultant…..smoke and mirrors…..have been around way too long already.
So Mayor SQS…..try this: Fullerton Water Conservation Regulations. Charging user fees for big users. Use Code Enforcement folks to catch folks wasting water. Hopefully, the Mayor’s Ad Hoc Committee doesn’t get free pizza or tacos at their meetings!
HB doesn’t need the water from the desal plant. It’s being built to provide water for planned development further inland. Which we also don’t need.
I don’t think that this is about water supply, Ronandanna, just about water rates.
“if you increase efforts to collect taxes, wealthy donors will simply increase their efforts to evade taxes”- remember, tax evasion is illegal and should be punished while tax avoidance is a legal choice where you change your behavior to get a more desired result. Example: I can choose to avoid the toll road by using an alternative route and not have broken any law however if I choose to run through the toll booth while evading the actual toll collection, then I have committed a crime and should be held accountable.
Evasion- illegal. Avoidance- planned and within the rules.
I believe that most people who pay a lot of tax (in their own mind or actually) will take prudent choices to avoid paying more tax than they should while not as many will choose to evade the tax all together- unfortunately for the rest of us who pay the price for their tax evasion.
I cannot believe how much water is wasted down here in SoCal just for everyone to keep their grass green. Travel to a “wet area” of the country such as Portland in the Summer and you will see many brown lawns as people are not as concerned with the green grass and simply let mother nature do its deal (not everyone, but a fair share). Over time, I have to imagine that the savings from artificial grass has to be great for a city in not only water but also maintenance (labor, machinery, and supplies). I hate when I see government (or anyone else’s) sprinklers going during or shortly after a rain- what a waste of a precious resource…craziness. Would love to see some changes in this area–I am sure that they are already going on and just not fast enough for some. Large capital expenditures versus smaller monthly cash outlays.
The decision to allow tax avoidance — by various means, to various extents, and with various degrees of transparency — is a political choice, one that can be determined through political means. Tax shelters weren’t put there by God, you know.
I agree about the grass. To me, a little brown grass in the winter or during a hot summer is a reminder that one does not actually live in the Garden of Eden.
No disagreement on the politics of our tax system and how shelters were put there- even shelters such as having kids, education credits, tax deferred retirement accounts, home ownership, etc… are all politically decided.
As taxes go up, those who pay the most are most likely to enter into tax avoidance strategies (not evasion hopefully as that is illegal) such as increasing their exposure to tax free muni-bonds, charitable giving, income deferral as allowed by the code, super charging retirement contributions, super charging education savings, etc…all are OK to do at any time, but are more attractive as rates rise. For example, an easy one is to see how much the high income earners will contribute to charity in Dec 2012 versus Jan 2013 with rates going higher…it is an easy 4% return based on the tax rates going up.
We agree there too. My point is that, whether or not this “avoidance” of revenue reduction by the city (the flip side of tax avoidance) is legal or not, it points out that cities have the same motivation to find revenue as taxpayers do to save it.
Fullerton could probably solve its budget problems by extremely aggressive enforcement of its traffic regulations followed by punishing fines. That would be legal “avoidance” of revenue reduction. Is it preferable to the water rates? I suppose that it may depend on how much you drive.
What’s the deal with SQS’s previous “support” of this levy?
Did she vote in the past to continue it, or particpate in it’s passage?
Regardless, calling it out today is the right thing to do, but strikes me as a little opportunistic, if in fact she did. The trouble with most of this, is the devil is in the details. But oncethe OCR and Lou Ponsi get’s on it it will be outlined for all to decide without bias (thats was a joke).
But, why the sudden change of heart, is this an Ed Royce/Joe Kony moment or something more?
Given what we’ve learned at the Water Rate AdHoc Committee, SQS and other council members did not have to “support” the levy because a municipal ordinance established almost 20 years ago and amended about a decade ago “requires” the transfer of water revenues to the general fund. Questions surfaced when the water rate adhoc committee convened last year with an admonishing threat by the City’s consultant that we were opening “a can of worms” in so doing. So here we are with the worms now at our feet. Frankly, I’m surprised the city didn’t shut us down at that point and thank the leading blogs for following this – and the council for bearing with us as we have pushed hard against past practices that are obviously embarrassing for everyone.
Good comment. I’ll feature it in the text as an update.
*Let’s play; How much does water cost? How much does it cost in LA? How much does it cost in Tustin? How much does it cost in Laguna Beach? How much does it
cost in Newport Beach? How much does it cost in Fullerton and Huntington Beach?
You need an Ad Hoc Committee to tell you that Bastenchury Water is cheaper than
Arrowhead? Really…….????? She is full of it……..overpriced water…that is!
What is Bastenchury water?
What’s missing here is that the transfer of water revenue to the general fund led to neglect of a key public service – replacing aging pipelines. Furthermore, studies show that we waste about half of the water we import from Northern California and the Colorado River by overwatering lawns and outdoor areas. Water is so cheap as compared to other utilities that our water department can’t afford to stop this waste without taking a hit that reduces the amount of water sale generated funds that can be transferred to the general fund. If you are confused don’t blame yourself. The system is upside down. Before we spend a nickel on desalination or other water supply ventures we need to fix the way we pay for water, reduce waste, maintain our infrastructure and only then finance what we may need to build to meet future demands.
Connect with Bastanchury Waters Co Inc in Fullerton, CA.
http://www.macraesbluebook.com/search/company.cfm?company=641084
*Adan….what are you a resident of Buena Park? Get with the program dude! You have zero clue….and have no idea about water. Ever hear of Domanegoni? Probably not! Ever hear of San Diego? Probably not. The system is anything from upside down. They have been running this scam-a-rama since the days of the movie:
“China Town”. Catch up…please…..especially these so-called pro-active electeds!
I live in Fullerton. Thanks for the link. Bottled water costs hundreds of times more than tap water and so I’m trying to understand your point as it relates to the city’s transfer of water dept revenue to the general fund. FYI: If you are referring to the Domengoni Reservoir in Hemet, it was officially named Diamond Valley Lake in 1999. I find your comments amusing and interesting and hope I see you at an upcoming meeting.
*Adam dude, do you really need an Ad Hoc Committee to tell you whether you should move the Water Revenue to the General Fund? Who cares? Does it make any more revenue by doing that or not? Does it matter how much you are going to pay for cubic feet of water now? Regional pricing for water is a fact of life for 80 years. Unless of course you have those endemic wells that belong to the city. Supply and demand is certainly a water fact of life in Orange County. Fullerton had the chance to buy the Bastenchury wells back in the 50’s but did not – because they were too cheap! Bottled water never got popular until the 60’s – and by then Sparkletts and Arrowhead had created far better quality product. Sparkletts got too big to quick. Their quality fell and Arrowhead took the lead. In those days, you could look into a glass of water that came out of the tap of your local city provider and see floating pieces of toilet paper floating and suspended. Only idiots thought that you could use that chlorine laced awful tasting stuff…was actually water. It was so bad you hardly wanted to use that water clean dishes with. It was only six years ago that Reverse Osmosis was adopted by the County in order to deal with the rocket fuel at the bottom of local well in the OC.
Sadly, you are still in error: Domanegoni Reservoir was turned into Diamond Valley Lake when they filled it up. Not the other way around.
Don’t bother to make coffee or tea with local water dude…..your perchlorates are showing! Meanwhile, don’t eat the cookies your Ad Hoc Water Committee is supplying either! Deal with your Recall Election and then move on. Forget the water issue…you are going no place fast.
We apparently don’t live on the same planet. For one, I care about being over billed. We can agree on the recall election though.
There are too many questions being raised on here for me to answer in the limited time I have. However, I do want to address Mr. Diamond’s concerns about the Water Fund not transferring $2.5-million per year to the General Fund.
First, as Councilmember Jones pointed out, lots of things are subsidized. In the case of water revenue, the Water Fund has been subsidizing the General Fund for more than 40 years. Many, me included, believe it is time to end that subsidy.
What impact will that have?? Considering the council approved a budget with an $8-million gap without a care, I think a $2.5-million cut is nothing to panic about. It should be looked at as an opportunity to streamline work and create better ways of operating.
This is truly an opportunity to bring the public into City Hall to find better ways to provide critical municipal services. The council alone cannot and should not be the only people determining the future of Fullerton.
As I have said before in other forums, I am interested in hearing your ideas as well as sharing mine.
Greg,
Thanks for stopping by. I hope you’re not surprised by my asking you a few questions.
(1) When you say that “it is time to end that subsidy,” you could mean “because it has been determined to be illegal” or “because it is a bad policy,” or both. Most of the discussion, including the Mayor’s press release, has focused on the former. Do I correctly infer that you would want to end this subsidy even if it were not illegal?
(2) You suggest that because the council’s budget (approved “without a care, really?) had an $8 million deficit, turning that into a $10.5 million deficit is not such a big deal. Is there an upper limit past which the reduction of revenue to the general fund would become something “to panic about,” and if so, where would that limit be?
(3) Presumably you don’t really contend that there was been no “opportunity” recently “opportunity to streamline work and create better ways of operating.” Would I be correct to interpret “opportunity” as “situation in which the City is forced to do something to survive,” in the sense that James Franco in 127 Hours was given the “opportunity” to saw off his own arm?
(4) My colleague (if I may call him that) Tony Bushala here has suggested that the “opportunity” at hand is to saw off a large amount of the “total compensation” to public employees — from what I can tell, from top to bottom. Without delving into the merits of that notion, would I be right to think that this too is the “streamlining” opportunity that you also seek? If you have other ideas — or indeed if you reject Tony’s approach — I’d love for you to share your ideas.
My idea is that people (and entities like cities) shouldn’t do illegal things, so if the Water Tax was illegal, so be it. My other idea is that people seeking reform should consider how they fix a problem so that the cure is not worse than the disease. Here, at a minimum, I’d hope that water tax proponents have considered the possible costs of their actions if Tony’s “total compensation” reduction (or slashing, whichever) philosophy is not adopted. I’d love to know what those thoughts were.
*Sebourn sir: So, are you saying that the City of Fullerton has been ripping off the
citizens for 40 years? Sounds like good grounds for a Class Action suit. How much
might the City have to repay homeowners and business folks for that little oversight?