Rate hike recommendations rejected (August 23, 2015)

Councilman raises questions over figures used in study

VICTORVILLE — A study that suggested raising water rates for the city’s consumers was recently rejected by Councilman Jim Kennedy, who questioned the baseline figures used to construct the recommendations.

The study was presented to the City Council on Tuesday night as an informational item only by consulting firm, NBS. It concluded that the Victorville Water District’s current rates were not sufficient for ‘a number of reasons,’ including to absorb the state’s mandated 28 percent reduction in water usage.

Citing a $7.5 million funding gap for the water district this fiscal year, NBS also said the district would run out of cash by fiscal year 2018-19 if it maintained the status quo. The firm recommended implementing either a flat 7 percent hike each year over the next five years or a more significant 20 percent hike this year followed by 2.5 increases in years two through five.

But Kennedy pushed back against the recommendations mid-presentation after he said the baseline figures used for the study didn’t match up with the district’s budget approved earlier this year by the Council.

‘Those revenues that this entire projection is built on seem to be, so far, off the mark,’ he said.

At Kennedy’s request, which appeared to be supported by the Council, City Manager Doug Robertson said they’d hold back on hearing the remainder of the study until the discrepancy in figures could be reviewed.

The study is expected to be brought back to the Council at a later date.

Meanwhile, Kennedy’s objection also seemed to galvanize other Council members into questioning any rate increase, including Councilman Eric Negrete who asked for copies of district personnel pay figures.

‘When you start talking about increases, I actually go the other way, I start talking about decreases,’ Negrete said. ‘So I think if there’s some fat to cut, I think that’s something I’d like to lay out, as opposed to assuming that water rate increases are the only answer.’

Mayor Pro Tem Jim Cox called for a study session and an audit of district equipment in order to determine what was actually being used and what had been mostly idle.

The study came in response to a recent rate study, Gov. Jerry Brown’s water conservation mandates and a court ruling that said San Juan Capistrano’s tiered pricing system for its water users had been unconstitutional.

Victorville most recently raised rates 4.1 percent last summer. Before then, a rate hike of 9 percent was enacted in fiscal year 2009-10.

A week before the 4.1 percent increase was approved, Director of Public Works Sean McGlade said the district had suffered annual operating losses averaging $1 million since 2009, adding that the then-proposed rate adjustment was necessary after four years of deferring it and amid mounting pressure from the state to improve declining infrastructure.

About 81 percent, or $44.8 million, of the district’s capital improvement plans over the next 10 years is tied directly to pipeline upgrades, according to the NBS study.

Source: Shea Johnson, Daily Press