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Water district officials: If the state borrows from tax revenues, will state repay us?

Posted by: Maven on June 11, 2009 at 8:20 am

From the Riverside Press-Enterprise:

Water rates would likely increase under a state budget-balancing proposal to borrow $2.1 billion in property tax revenues from cities, counties and special districts, local water officials said. Gov. Arnold Schwarzenegger wants to use the money to help close California’s $24.3 billion budget gap. Under Prop. 1A, passed in 2004, the state can borrow 8 percent from all agencies and must repay the funds, with interest, within three years.

But the state’s legislative analyst has suggested taking more than 25 percent from water and wastewater districts because they can raise rates to recoup the money. It would result in a hit of at least $500 million to those districts, according to the Association of California Water Agencies.

Losing 25 percent of property tax revenue could result in a rate hike of about 10 percent for customers of Eastern Municipal Water District in Perris, said Chuck Rathbone, the district’s chief financial officer. It would follow a February increase of 6.2 percent, which cost most customers about $2.71 per month, and a new tiered-rate system that penalizes customers who go over a set water budget.

“The state says water and sewer special districts can just raise rates. It’s true, but is that the right thing to do?” Rathbone asked.

Other districts said rates likely would increase if the state borrows the property tax money, but they didn’t have estimates of how much.

Read more from the Press-Enterprise by clicking here.

June 11, 2009 · Filed Under Water Agency News

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