Water District Approves Rate Increase

The board Monday voted to approve an 18 percent rate increase from among three options to address a revenue shortfall despite .

By a 4-1 vote, with director Paul Selsky opposed, board members voted to adopt the rate increase then freeze the rates for a period of three years to strengthen the district's financial reserves.

"I'm for Alternative 1 because I don't want to keep kicking this can down the road," said board president John Wallace. "We need to raise it sooner rather than later."

after hearing from customers who were mostly opposed to the idea during a Dec. 12 meeting. Other alternatives before the board Monday were reducing the proposed rate increase of each customer class to a 9.4 percent revenue increase or a surcharge for a period of 30 months through June 2014.

"I think there was a better way to resolve this," said Carmichael resident Randy Baptista. "This shows fiscal irresponsibility... the should have planned responsibly."

Board members have said the rate is necessary due to a significant revenue shortfall. A Proposition 218 notice was sent out in late October saying the district did not anticipate receiving enough revenue to cover its debt or operating expenses.

The main reason revenue is down, officials said, is that water usage is 25 percent below what was anticipated. Usage is down to due to a wet winter in 2010 and mild summer in 2011, a sluggish economy and new metering issues.

"We're in the unenviable position of having to raise rates to not have a financial crisis," said board director Roy Leidy, adding that the district has already cut its budget and delayed new projects. "We need to fix the financial problem now before it's too late."

Board members have pointed out that the 18 percent increase proposal is only one component of a customer's bill and would affect each individual classification differently.

Still, several residents took issue with a debt increase in which the water district borrowed $2 million to enter into an agreement with Aerojet and Sacramento County to protect the groundwater basin at from migrating contamination.

"Maybe it's time you think outside the box," said resident Jim Baker, adding that the board try to restructure its debt (one director said that was denied). "There could be something you do besides raising our rates."

Former district board director Sandy Kozlen said the public's anger was misdirected at the board, which he said has no health benefits and serves residents.

"Last time, I was embarrassed by my neighbors in Carmichael by what I saw," Kozlen said.

Not all residents who spoke Monday were against the rate increase.

"Even in these depressed times, it's doable," said Peggy Barry. "To guarantee me clean, safe water, I'm more than willing...I hope the community will see what you're giving us in return."

But the overall tone from residents was one of anger.

"You always end up passing it on to ratepayers," said , a co-leader of the Carmichael, Citrus Heights and Fair Oaks Tea Party Activists organization. "You people forget how to be fiscally responsible."

Under the approved plan, a citizen committee will be formed in 2013 to update the district master plan, financial plan and rate structure. Once reserves are recovered to the reserve goals recovery level, any funds collected over the approved budget would be credited back to the customers' accounts. Officials will also continue to look for ways to reduce the budget.

The district serves 39,000 customers through 11,500 connections.

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