By Joe Tash
Santa Fe Irrigation District customers on Thursday, Nov. 18, urged the agency to cut employee pensions, freeze wages and benefits and curtail compensation for the elected board of directors rather than raise rates by up to 36 percent over the next three years.
In spite of the ratepayers’ objections, the board voted 3-2 at its Nov. 18 meeting to raise rates 12 percent on Feb. 1, 2011, and then again by up to 12 percent each of the following two years. The increases approved by the board come on top of rate increases of 50 percent over the past three years.
Board members John Ingalls and Augie Daddi — who lost his seat in the Nov. 2 election and will step down in December — voted against the measure, while board members Michael Hogan, Ken Dunford and Robert “Bud” Irvin supported it.
Before the vote, Hogan said the major factor in the rate increases is the rising cost of water supplied to the district by the
Metropolitan Water District of Southern California and the San Diego County Water Authority.
“They’re out of our control,” said Hogan.
Dunford said the 12 percent rate increase approved for 2011 actually falls short of covering cost increases faced by the district in the coming year, and that the district plans to supplement its operating budget over the next two years with about $1 million from reserves.
“The 12 percent is not covering our costs,” he said.
Daddi agreed with his fellow directors that the district has taken steps to cuts costs in recent years, but said he was convinced by the comments of ratepayers at the past two board meetings that the district should only implement the rate increases for one year, and reconsider the additional hikes next year.
Daddi and Ingalls both supported a motion that failed — also on a 3-2 vote — to approve a rate increase for 2011.
Ingalls said the district should investigate selling bonds to pay for capital improvements, which could reduce the need for future rate increases.
District customers who addressed the board urged directors to cut spending in such areas as pensions, salaries and compensation for board members.
Brad Burnett said he examined district financial records and learned that the agency spent more than $700,000 on employee pension contributions in both 2008 and 2009. He noted that employees with 20 years of service can receive 54 percent of their final year’s salary when they retire, and those with 30 years’ service can receive 81 percent.
“I’m willing to pay a fair rate for water, but I’m not willing to pay for a lavish pension plan,” Burnett said to applause from the audience.
Greg Gruzdowich recalled recent protests in France when the government sought to raise the retirement age to 62. Water district employees, he said, can retire at age 55.
“The French would be proud of you. As an American, I’m not,” Gruzdowich said.
He also urged the board to pass a motion relinquishing all compensation and benefits for its members.
In the 12-month period ending June 30, 2010, the water district spent $55,625 on per diem payments and expense reimbursements for the five members of its board of directors. The district also spent about $47,000 on medical and dental benefits for board members during the same period.
Dan Hayes said that if the maximum 36 percent rate increase is adopted by the board over the next three years, his own water rates will have increased by 103 percent over a six-year period.
“Government agencies that have the monopoly and power to do what they want to do are running rampant,” Hayes said, and urged the board to freeze all wages and benefits at current levels. That way, he said, the district could raise rates by 8 to 10 percent next year, and determine later the amount of increases needed in future years.
Board president Michael Hogan said the district is negotiating with the agency’s 48 employees on a new labor agreement, and is seeking to increase employee pension contributions.
While he and his colleagues understand the current pension system is not sustainable, the district has to work within the existing state employee retirement system, which will take time. “I wish there was a way to change course immediately, but we can’t,” Hogan said.
As to the directors’ compensation, Hogan said he would support bringing the issue before the board at a future meeting for discussion. He said the board could not take action to curtail board member compensation and benefits at Thursday’s meeting because it was not on the agenda.
While the board approved the staff’s recommendation for a maximum 36 percent rate increase over three years, members declined to support a so-called “pass through” resolution, also recommended by staff, that would have allowed the district to pass on any cost increases adopted by the district’s water suppliers. Instead, any additional rate increase would have to come back before the board of directors for consideration.
Under the 12 percent rate hike approved for 2011, a customer who uses 60 units of water per month will see his or her bi-monthly bill rise to $242 from the current $216.
The district serves Rancho Santa Fe, Solana Beach and most of Fairbanks Ranch, an area with a population of about 22,500.