Water rates

Two weeks ago, when the SCVWD Board had got to the end of its budget week without having finished, they set a special meeting for today, 9 June, to get through it all. Director Estremera proclaimed “We won’t leave until it’s done, even if we have to set up cots in the Board room.”

At about 4:45 this afternoon, that enthusiasm was flagging, but the Board managed to stick it out long enough to make decisions on staffing, and to set the groundwater charges for the upcoming fiscal year. They didn’t, however, get through the entire draft budget, so that’s been carried over into tomorrow’s already-crowded agenda.

I’ll cut to the chase. The Board did not approve staff’s request for 12 new positions, and they did approve the recommended non-agricultural groundwater charges of $520 per acre-foot in north county and $275 per acre-foot in south county. Given the 28 vacant positions that had already been cut from the draft budget by the CEO, these charges could have been $16 and $18 less per acre-foot, respectively, and Directors Kamei and Kwok voted to reduce them by that much. The majority opinion, forcefully voiced by Directors Estremera and Wilson, was that there are unknown but large costs that the District will face, possibly this year, and that the extra money should be collected and set aside in case of these eventualities. Directors Sanchez and Santos voted with the majority. Director Judge was not present at the meeting at all.

Directors Kwok and Kamei tried to make the point that extra costs should be explicitly budgeted and charged for, instead of collecting extra money “just in case.” I strongly agree with this position.

Several points stood out for me during this five-hour meeting. First, Peter Ng, the CFO, said that every 10% drop in demand for water leads to a $13.5 million decrease in revenue for the water utility. Quite the perverse incentive; it’s amazing the District encourages conservation as much as it does. Second, the salary and benefit costs for the District rise about 3.8% a year, from inflation and union agreements alone, irrespective of extra staffing.

The City Manager from Morgan Hill, Ed Tewes, made a comment that, in the city of Morgan Hill’s view, the groundwater charges are a “property-related fee” under the terms of Proposition 218 and, as such, should not be charged at different rates for agricultural and non-agricultural use, since the benefit to either type of user is the same. This seemed to catch the Board by surprise. Director Santos had clearly never heard of Prop 218, and Chair Kamei had to ask Mr. Tewes to come back and explain it a bit more.

Chair Kamei had some sharp words for staff regarding community outreach programs like CreekWise, the Creek Connections Action Group (which coordinates the cleanup events twice a year) the Adopt-a-Creek, sandbag outreach, and schools programs. Staff insisted that they needed another position to support them, and the Board insisted back that they were important priorities for the Board, and should be accomplished using existing resources.

The Board, again, focused a lot of attention on relatively small amounts of money, which is why this meeting lasted as long as it did. However, I know that these “small amounts” add up. Director Estremera expressed the hope that “enforced shortages” from the 12 unfilled extra positions would put enough pressure on staff to come up with more operating efficiencies. With the stress that every Director put on the fact that staff can always come back for a budget adjustment if they can’t get the work done, I have some doubts.