Jacks Up Utility Rates
By Gene Williams
June 22 -- Santa Monica residents and businesses will be paying
more for water and waste collection beginning next month, after the City
Council approved utility rate hikes under a $383 million budget for fiscal
In an effort to cushion the blow of a likely series of multi-year tap-water
rate increases that could total as much as 47 percent, the council directed
staff to begin with a 6 percent hike as soon as possible.
However, the council left the final decision of just how much to raise
water rates, when and on whom to a later date.
In addition, fees for solid waste collection will also go up 10 percent
beginning next month.
Staff must now crunch the numbers and come up with language for the council’s
The 6 percent hike in the water rate adds a 2.2 percent increase over
the already scheduled 3.8 percent rate hike based on the Consumer Price
Index set to kick in next month (CPI).
“When you see the deficit, the drop in the water fund, we know there will
have to be an increase,” said Genser, who made the amendment.
He later added that a modest increase soon would get “a jump on it” and
“help alleviate sharp increases.”
Council member Richard Bloom, who first floated the idea, worried that
putting off action would leave the public unaware until December, which
he called an “inopportune time.”
But Council member Kevin McKeown -- who made the main motion -- expressed
disapproval at what he saw as an about face on the part of council members.
His colleagues, McKeown said, were at first “loathe” to raise water rates
at all, yet now seemed ready to begin raising them sooner than in January,
as recommended by staff.
Instead, McKeown suggested revisiting of the rate tier system in which
big water users pay more per cubic foot than light users.
Rather than a flat across-the-board increase, the burden of making up
shortfalls in the water fund should be placed on those who use the most,
while -- perhaps -- those who use little shouldn’t see their rates go
up at all, McKeown said.
Such a policy would encourage “sustainability,” he said.
Genser’s amendment passed narrowly by a four to three vote, with council
members McKeown, Herb Katz and Bobby Shriver voting against it.
McKeown’s motion to conduct a rate/cost analysis to explore other options
and focus on sustainability passed unanimously.
Solid waste management received a similar treatment by the council.
Under Genser’s motion, staff will conduct a rate/cost analysis based on
a 10 percent hike -- 6.2 percent over the scheduled 3.8 percent CPI increase
-- that will apply across the board to local residents, as well as private
garbage haulers who use the City’s transfer station and recycling services.
The motion -- which Genser called a “remedial measure” -- passed unanimously.
But not until after some council members voiced questions.
“I think it’s important that staff brings us a breakdown of where it (solid
waste expenditures) are going, literally, program by program……so we can
make an intelligent decision,” Katz said, echoing the concern of other
Referring to solid waste operations, Shriver said, “We still have no really
good cost accounting of what it costs to run this.”
Also, earlier in the session, Shriver acknowledged receiving memos critical
of the City’s practices from a private hauling company. He was apparently
referring to Southern California Disposal, which is seeking to take over
the City's transfer station.
While Shriver admitted that the company had a vested interest, he said
the “level of questions and analysis I’ve received in these memos are
very good.” Shriver said he wanted those questions answered before he
would commit to rate hikes.
Throughout a discussion Council member Bob Holbrook compared to a “runaway
train” that “hit the station,” several council members said they wondered
why they weren’t made aware until last month of the shortfalls in the
City’s utilities funds that triggered the urgent call for rate increases.
Utility funds, which were once vast reservoirs of money, have been drained
over the last three years and will run dry unless "dramatic action
is taken soon," according to City finance officials.
The water fund, which in 2002 held reserves of $17.5 million, has shrunk
to a small pool of only about $5 million, finance officials said.
Similarly, the wastewater fund, which held $23 million three years ago,
now has only about $10 million, City finance director Steve Stark told
the council last month
"Year after year of having CPI increases that haven't been as great
as the cost of providing the services is the main reason we've got into
this imbalance," Stark explained.
Land fill expenses have increased 40 percent in the last two years and
are expected to climb an additional 18 percent in the near future, Stark
During the same period, wages, salaries and benefits have increased some
10 percent, as have costs for fuel and vehicles.
In May, Stark presented the council with a variety of options -- all of
which would raise customers' bills by 25 to 35 percent -- to keep the
money-losing utilities in the black.
The biggest proposed increase is for tap water, which would either see
a sudden jump of 31 percent in January 2006, or gradually increase by
40 percent over two years, or as much as 47 percent if the increase is
spread out over four years, according to the plan.
Similarly, garbage collection would go up between 20 and 30 percent, and
sewer fees between 25 and 30 percent, depending on how quickly the rate
hikes were put into effect.
On Tuesday, 28 members of the public showed up to speak to the council
about the budget. However, the proposed utility hikes, which was a separate
item, only drew two speakers, Joy Fulmer and Joe Natolie, who are regular
speakers at council meetings.