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Sun, Apr

MWD’s Non-Transparent, Blank Check Tax Increase

LA WATCHDOG

LA WATCHDOG - The Metropolitan Water District (“MWD”) is proposing to double or triple its assessment on our real estate because the management says it will result in lower rate increases and improve its fiscal integrity.   The management is also saying that this tax increase on apartment dwellers and homeowners does not require the approval of voters in its six-county service area. And the lack of transparency is shocking as this deal is being cooked up by the bureaucrats and politically appointed Board members without reaching out to those of us who will be footing the bill. 

Despite its importance in delivering water to Southern California, MWD is not a very well-known, transparent enterprise, in large because it is not a customer facing organization.  Rather, it supplies water to 26 water agencies, including the Los Angeles Department of Water and Power, which then pass along the water and the costs to the area’s 19 million residents. 

The current tax rate of 0.0035% is applied to properties with an Assessed Value of $3.6 trillion. While the tax on a home or rental apartment valued at $600,000 is a modest $21 a year, this tax provides MWD with an estimated $190 million according to MWD reports.  And over the last ten years, the Assessed Value has increased by an average of around 6%, providing MWD with a small, but reliable source of revenue. 

There are many issues surrounding this $200 to $400 million increase in our taxes.  

The first is that this increase has been cooked up behind closed doors. There has been little to no outreach by these all-knowing “water buffalos.” The message is clear: we are being treated like mushrooms, kept in the dark and buried in manure. 

By shifting some of the cost increases onto property owners, MWD is hurting conservation as the lower cost of water will be sending the wrong price signal to end users.  The higher the price, the greater the incentive to conserve.  

MWD believes this tax increase is not subject to the approval of the voters.  Is this a blank check where MWD can raise our taxes at its discretion?  Over the next four years, the District’s capital budget in $2.4 billion.  But what about over the next fifteen years when MWD will need to finance its portion (47%) of the controversial Bay Delta Conveyance Project with an overall cost of at least $16 billion (and probably much, much more) or its Pure Blue wastewater recycling facility that will cost $20 billion according to knowledge industry participants.  Will property owners be on the hook for these two massive projects that will have annual debt service costs in the billions?      

If MWD attempts to proceed without a vote of the residences, there will be prolonged litigation that will have an adverse impact on reputation of the District, its Board members, and its many of its 26 member agencies.   

As a final point, Mayor Karen Bass is opposed to this proposed doubling or tripling of this tax increase because of its disproportionate impact on City residents and its disadvantaged communities. 

Rather than proceed with this proposed tax increase that was incorporated into MWD Biennial Budget without any public input, MWD needs to institute a broad-based community outreach program to discuss the pros and cons in an open and transparent manner. It also needs to consider placing any tax increase on the ballot to avoid prolonged litigation where only the lawyers benefit.  Otherwise, the political establishment will feel the wrath of the voters.

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate.  He can be reached at:  [email protected].)

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