‘Cost of Service’ Principles Protect Ratepayers

By Jon Coupal

Governor Brown has foolishly decided to poke a hornets’ nest with his signing of Assembly Bill 401. While AB 401 itself isn’t particularly controversial, as it merely authorizes a couple of state agencies to devise a plan by 2018 to assist low income individuals with paying their water bills, the problem is what Brown wrote in the letter approving the bill.

Although not common, Governors occasionally issue a statement when they approve a bill passed by the Legislature. In signing AB 401, Governor Brown exposed his disdain for the taxpayer and ratepayer protections set forth in Proposition 218, a Howard Jarvis Taxpayers Association initiative approved by voters in 1996. Brown stated that, “Proposition 218 . . . serves as an obstacle to thoughtful, sustainable water conservation pricing and necessary flood and stormwater system improvements.”

The Governor could not be more wrong. Proposition 218 mandates that water rates be based on “cost of service” principles. Simply stated, “cost of service” means that you should not pay more for water, sewer or refuse collection than it costs to provide you with that service. The reason voters approved Proposition 218 in the first place is because politicians and bureaucrats had cleverly bypassed the property tax limits of Proposition 13 by imposing a myriad of fees, charges, assessments and other exactions to get money from taxpayers’ wallets.

Brown seems to be talking out of both sides of his mouth in his letter approving AB 401. In blaming Prop 218 as a major impediment to water conservation efforts, he ignores the fact that “cost of service” water rates actually encourage conservation. Conversely, water subsidies, which he expressly supports, are a disincentive to conservation.

What this means is that Brown believes water needs to be more expensive for the middle class in order to encourage conservation, as well as more expensive for wealth redistribution. And while he suggests that low income people pay less than their fair share, he does not speak of conservation goals as they apply to these ratepayers. The kicker is that he wants the middle and upper classes to fund water service and to bear the burden of the majority of resource conservation. This isn’t fair at all and is precisely why voters enacted Proposition 218.

To those who believe that taxpayers are over-stating their case, consider this: Governor Brown wants to engage in the same sort of social engineering with water rates that he has with energy costs in California. It is painfully obvious that the results of these policies have been a disaster for California, particularly the middle class.

Let’s not let politicians like Brown force higher water rates on California’s ever shrinking number of working taxpayers and homeowners. Water rates should be based solely on the cost of providing that service without engaging in ill-fated social experimentation dreamed up by bureaucrats unhinged from the real world.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

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October 22, 2015  Copyright © 2012 Eastern Group Publications, Inc.

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