New Sewer Rates Will Impact Citizen Wallets by 77% Over 10 Years; Some Question Board’s Ability to Manage Dept
- Written by Jack Humphreville
18 Oct 2011
LA WATCHDOG - The Budget and Finance Committee of the City Council approved a ten year, 77.4% increase in our Sewer Service Charge at its Monday afternoon meeting at City Hall. It consists of a 4.5% increase in the first three years and 6.5% for the remaining seven years, resulting in a compounded annual increase of 5.9% over the next ten years.
Over the next five years, our rates will increase by 29.4%, or over $105 per year for the “average” family. But considering that our rates have not increased in three years, this increase is not unreasonable. If this rate increase is looked at over an eight year period, the compounded annual rate of increase is 3.3%.
This increase is lower than the five year 39.4% increase preferred by the Office of the City Administrative Officer (the “CAO”) who contemplated a more aggressive pipe replacement program. And it is considerably lower than the 54% increase that was initially discussed by the Bureau of Sanitation a year ago.
While the outcome of this highly orchestrated meeting was never in doubt, the most recent reports by the Bureau of Sanitation and the CAO did not contain adequate financial projections despite previous requests. There were no projected income statements, balance sheets, or funds flow statements that you would normally expect from a well managed operation that has assets of $4.5 billion, debt of $2.7 billion, revenues in excess of $500 million, and an operating profit of $271 million.
Furthermore, the level of detail (some would call it micromanaging) contained in the CAO report that was submitted on Friday night suggests that the CAO has some issues with the management of the Bureau of Sanitation and the Board of Public Works as to the efficient and prudent operation of the sewer system.
But this is understandable given that the highly compensated, politically active Board of Public Works does not have the expertise and experience to run the Department of Public Works, its $2 billion budget and over 5,000 employees. See the August 5 City Watch column, LA’s Board of Public Works Not Working.
Interestingly, there was no discussion of the notification and voting procedures required by Proposition 218. Nor were there any discussions of Proposition 26 (the Supermajority Vote to Pass New Taxes and Fees Act) despite the fact there are significant transfer pricing issues between the special revenue Sewer Construction and Maintenance Fund and the City’s General Fund.
Nor was there any discussion about an interim rate increase of 5.5% which would have allowed the City Council to get a better understanding of the projected finances of the sewer system and the efficiency of its operations, and at the same time, begin to establish a higher level of oversight of the politically appointed Board of Public Works, the same folks that are responsible for our lunar cratered streets and crumbling sidewalks.
And most importantly, there was no discussion or consideration of the impact on Angelenos of the proposed five year increase of over $3 billion in our water rates, power rates and the related transfer fees and utility taxes, sewer fees, and stormwater tax, as well as any mandated sidewalk repairs.
But that is par for the course since our Elected Elite view our wallets as their own private ATM.
Tags: Sewer Rates, Sewer Service Charge, Public Works Board, Bureau of Sanitation
Vol 9 Issue 83
Pub: Oct 18, 2011