Paying the cost for paying the costs

Livingston, California: brown water better than higher water fees?

In not recognizing that the provision of a service so basic as clean water is linked to the need to pay for that service, Chattanooga’s residents were hardly alone. In tiny Livingston, California, population 13,000, voters yanked Mayor Daniel Varela Sr. from office at the end of August, two months before his term would have expired anyway. His offense? In a move he now calls “political suicide,” Varela raised water fees to update a well system whose galvanized pipes dated back to the 1920s, and that was producing brown water. At “notorious Well 15,” Varela said, water carried a “yellow taint,” and levels of manganese that exceeded state safety levels for drinking water.

Upon taking office in 2008, Varela, who had campaigned on a pledge to clean up Livingston’s water, received all the work his predecessors had done on the water issue, including consultant reports and recommendations, state environmental studies, and orders for clean up. Prior administrations had documented the problems, but failed to do anything about them.

In Livingston, water rates were based on a flat fee — $58 per month per household — regardless of usage.  The rates hadn’t increased in 15 years. That left the city without enough money for maintenance and upkeep. The city subsidized water costs with money from its general fund, which would otherwise ordinarily cover services like police and fire, and parks and recreation facilities. The diversion meant the city had to cut back on services, and to shelve plans to build a new firehouse.

In the spring of 2009, Varela proposed a plan to raise rates based on usage, phasing in the increases over several years. In line with California’s Proposition 218, he sent residents letters notifying them of three proposals for raising water fees, and inviting public comment.

Resistance was initially limited.  A petition to block the council from passing the increase, which would have required 1,500 signatures under Proposition 218, gathered only 400 names.

But the proposed increase faced other challenges. The five-member City Council lacked the super-majority of four votes that the city attorney said was needed to approve an increase as a city ordinance. Eventually, the city fired that attorney, and passed the increase as a resolution, instead of an ordinance, with just three votes, in June 2009.

In short order, the city’s main employer, Foster Farms, a poultry farm, challenged the increase in court, saying that the city had not followed proper procedure in adopting the change. 

Varela said he had tried from the beginning to explain the need to increase fees to voters, who were already hurting with a slow economy. He said he intensified his efforts once the increase went into effect, but asserted that many Livingston residents were in no mood to listen. To some, an increase in water fees was a hardship. “I know a family, their children moved back in with them. You got 11, 12 people in the house, you’re going to use more water. They’re upset. They’re going to have to pay for that water,” Varela said.  “These folks don’t understand what happens to the water you flush down the toilet. It’s out of sight, out of mind.”

At a Town Hall meeting in November 2009, there were 400 people on hand—most of them angry. “I said, ‘Look, folks, we don’t want brown water. We want clean water. Every day at recess our children are drinking this water,” Varela recalled. In fact, he reminded residents, the water rates were so low that the state refused Livingston’s request for financial help. Instead, the state hit Livingston with daily fines for failing to remedy the high level of manganese at the well Varela had described as “notorious.”

But the meeting devolved into personal attacks. A woman who stood to defend Varela’s position said, “Look, you folks have gotten off saving money when other communities are paying for clean water.” She was hollered down, as was Varela. One critic of the fee hike held up a jar of brown water, declaring, “We’re not going to pay” to clean this up.

“When you’ve got these folks hounding you, insulting you, it’s impossible to talk,” he said. “They’re just local citizens that act like thugs.”

In February of this year, the court ruled in favor of Foster Farms, holding that City Council needed to have passed the measure by a two-thirds majority, and that the City should have provided advance notice to residents of the proposal that was ultimately adopted (a smaller increase than the proposals initially circulated).  The increases, though, stayed in effect while Mayor Varela pursued an appeal of the court ruling.

In March, opponents of the rate increase began an attempt to recall Varela from office. In late August, they succeeded, as voters in a special election came out three to one in support of Varela’s recall. (His name was on the ballot once again in November, and again, he was rejected three to one.) Varela’s replacement has abandoned the appeal, rolled back the increases, and halted the improvements to the water system. The city is facing possible bankruptcy.

“You’d be surprised, that people would be okay to drink or bathe in brown water when they see they have to pay a difference for it,” Varela said.  He likened the disconnect to a person who has been relying on government aid, but then dons  “a shirt on that says, ‘Screw the Government.’”

Miami-Dade: when real estate prices tank, can property taxes still pay the bill?

Not so very long ago, Miami-Dade’s Mayor Alvarez used the petition process to expand the power of his office, firing up voters in 2007 for what came to be known as the “strong mayor” referendum. A former police chief, Alvarez campaigned on a platform of efficiency and fiscal restraint, taking aim at a county commission that he portrayed as wasteful and corrupt.  “You have to have one person elected to be responsible for the actions that take place in county government,” Alvarez said after the vote. He reorganized his office, promoting his staffers and increasing their salaries substantially.

Months later, the recession hit. The bursting of the real estate bubble hit Florida worse than almost anywhere in the nation. Bankruptcies and foreclosures climbed, while tax revenues from gasoline and sales of consumer goods plunged. Home values in southern Florida fell dramatically, shrinking revenues from property taxes alone by $248 million between 2008 and 2009. Without an increase in tax rates to restore some of the lost revenue, the county would lose nearly a half billion dollars from shrinking property taxes between 2008 and 2010.

In that environment, the salary increases Alvarez had granted to his staffers fueled voter outrage, prompting the first unsuccessful effort to recall him in December 2009. It was led by Lazaro Gonzalez, a retiree who spent his days researching municipal records. Gonzalez told Remapping Debate that in flush economic times, voters did not focus on how politicians spent taxpayer money, and whether it was necessary to raise salaries and expenses. “In his first term, it wasn’t noticed, because people had a good economic situation,” Gonzalez said. “If they have money to pay, they understand you have to contribute to the government.”  But by 2009, people were hurting. Gonzalez criticized the salary increases and the size of the mayor’s staff, calling the double digit raises “disrespectful” to voters.

In contract negotiations with municipal employees in 2008, Alvarez reached a three-year agreement that, he estimates, saves the county $90 million a year, by getting civil servants to pay 5 percent of their salaries toward their health insurance — a first. The agreement suspended merit and other salary increases for the second year of the agreement, but those increases are coming due in the current fiscal year — and voters are balking.