Soapbox

Council should give back tax windfall

Utilities workers repair a road in East Sacramento where a water main burst in 2012. The City Council is to vote Tuesday night on water and rate increases. If approved, the city will also benefit from a tax on utility bills.
Utilities workers repair a road in East Sacramento where a water main burst in 2012. The City Council is to vote Tuesday night on water and rate increases. If approved, the city will also benefit from a tax on utility bills. Sacramento Bee file

On Tuesday night, the Sacramento City Council is to consider a proposal that would drive up water and sewer rates by double-digit percentages for four straight years. Next year, the council is also expected to ask voters to approve four years of double-digit rate hikes for storm drainage.

If all of the contemplated hikes are enacted, the typical homeowner’s city utility bill would increase by 48 percent, vacuuming almost $88 million more each year from residents and businesses. City officials seem not to have noticed that median household income in Sacramento fell by 12 percent between 2007 and 2013. Nor do they seem to care that there has been no effort to examine the impacts such rate hikes would have on struggling residents or businesses.

But there is more to the story.

Because of an 11 percent utility tax, close to $10 million of the $88 million will be siphoned each year and diverted into the city’s general fund to pay for other costs of government. (That number would drop to $6.3 million if storm drainage rates remain unchanged.) This is on top of a huge existing city overhead charge that is paid annually into the general fund out of ratepayer money, a fact known only to a few city budget nerds.

The diversions will reduce resources available to keep our water safe and clean and keep our sewer and storm drainage systems operating effectively. It will also drive up future utility rates.

Council members have a clear conflict of interest in deciding how much to increase utility rates since they know full well that for every dollar they add to your utilities bill, they’ll automatically add 11 cents to the city’s general fund.

We believe that extraordinary new investments in infrastructure financed by huge utility rate hikes should not serve as a pretext for a hike in city taxes. When voters approved the utility tax in 1998 they never imagined that the council would ever approve double-digit, multiyear rate hikes that would far outpace both inflation and their ability to pay.

Tell the council to give back the $10 million tax windfall.

Craig Powell is president of Eye on Sacramento, a local government watchdog and policy group. He can be contacted at craig@eyeonsacramento.org.

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