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Good luck if you want to try & stop big jump in your City of Manteca utility bill
sewer louise

Before folks start boiling the tar and collecting bird feathers they might want to begrudgingly give thanks to Manteca Mayor Ben Cantu when they throw him under the proverbial bus.

His decades-old Don Quixote treatment by the old guard that once inhabited city hall and city politics is now proven to have been misplaced. And even though he may not have gotten the exact causes of perennial municipal funding issues and the inability to secure amenities precisely right, he was pretty darn close.

The revelation Tuesday that the city has dug itself a nice $20.9 million hole and counting by playing a political appeasement shell game within the water and sewer accounts is the direct result of Cantu pushing City Manager Miranda Lutzow to get to the bottom of municipal finances shortly after she was appointed the interim city manager nearly 16 months ago.

For years Cantu had “smelled” that something was wrong given a growing city like Manteca should be better positioned in terms of roads and other amenities than it is. For years he has nailed part of the problem dead center — Manteca has too low of a tax base to fund all of the amenities and services people say they want and are demanding.

You could argue that the government amenities and services are what people are willing to pay for and nothing more. But that argument went down quicker than the Titanic Tuesday when the smelly onion that is the city’s finances was peeled back to its core.

Over the course of at least 13 years Manteca has played an expensive game of political appeasement.

While Councilman Charlie Halford’s assessment was right in that this is not the time to look back but to look forward meaning it accomplishes nothing wasting energy and goodwill trying to assess blame for what happened, you need to have a general understanding of how this mess came about.

Cantu is correct that there was a dearth of political will.

But it is much more than that.

Those of us who scream bloody murder every time a rate increase is suggested are responsible to a degree given how we hammer elected leaders. And we’re the ones that will be handed the big bill now that the sins of the city are coming due.

The roots of the enterprise fund crisis — specifically involving water and sewer — started shortly after the last rate hikes were approved in 2008. Elected leaders were under pressure not to raise rates when the Great Recession hit even though a new rate structure was already in place.

They justified not doing so by reducing labor costs — which city employees agreed to — 20 percent across the board. Ironically, that was a move made to prevent the city from digging itself a massive financial hole as revenues cratered.

By suspending four years of rate increases that meant they were ignoring the original rate study that justified the rate hikes. They are two components to the sewer rate we pay. One is for maintenance and operation and the other is for capital improvements to replace aging lines and such.

The capital improvement costs unlike in general fund departments are significantly more than salaries and benefits in the sewer account. Much of the rate hikes they suspended were designed to accrue funds for projects that can run as high as $12 million plus as the city is now discovering by just replacing a relative short section of trunk line that is deteriorating after more than a half century of use.

By suspending the four-step rate hike aimed at easing the pain to ratepayers, a significant amount of money went uncollected that was needed for critical projects. The shortfall kept compounding with every passing year.

So how did the city do the sewer and water work that has been completed around town for the last 13 years? They turned to inter-fund borrowing.

This is where the lack of political will turns into a story of someone at city hall failing to follow through. The loans —which are made with interest — were approved by the council. The problem is no one at 1001 West Center Street bothered to make sure the loans were being paid back.

The biggest source of $30 million plus in inter-fund loans was the PFIP fees for streets. PFIP is shorthand for Public Facilities Improvement Projects. These fees were what legally could be assessed against new growth to pay their share of needed major street improvements and interchange upgrades. The PFIP streets fund was raided to a degree of $20 million for sewer and water projects. Not a cent of principal or interest has been paid back.

In case you are wondering, that is almost enough to upgrade either the Main Street or Airport Way interchange to the same level as the Union Road interchange. One or the other could actually probably be done if the PFIP streets account was paid back complete with interest.

There’s only one problem. The sewer account is on track to have a $16.2 million deficit by June 30 while the water fund is barreling toward a $4.6 million shortfall.

That means those two accounts — once you add the legal requirement the loans be paid back so fees collected from new home buyers are used for what they were levied — have a $49.9 million deficit and counting.

To give you a clue of what we’re talking about, that’s about how much the city spends in a year for day-to-day government operations such as police, fire, parks, street maintenance, and general government. The shortfall and loans come to $585 for every man, woman and child in Manteca.

If a typical household has three people, the city has to come up with a way to get almost $1,700 from each sewer and water ratepayer to cover money that has already been spent. This doesn’t include new projects needed going forward nor somewhat less severe financial challenges with solid waste.

You can tell where this is going. There has to be a sizable increase — hopefully phased in over multiple years - to keep the city afloat.

It doesn’t matter that the city has $100 million in cash on hand. Most of that money is restricted by law for specific purposes or is needed to fund police, fire and other daily services.

And if you think you can stop it, good luck with that one.

Rate increases for municipal services can be stopped. However, they are not like taxes.

Under Proposition 218, fifty percent plus one of all impacted ratepayers — there is close to 30,000 in Manteca — must submit a written protest letter by the date of a public hearing. That takes much more effort than marking a pre-printed ballot mailed to you and sending it back. Stopping a rate increase that’s governed by Proposition 218 is extremely rare in California. It has succeeded where they are relatively few ratepayers.

Significant rate increases are a forgone conclusion. The city can’t keep making inter-fund loans and not paying them back.

Essentially the sewer and water fund are like the old school Pac-Man video games. They will keep gobbling up everything in sight in the general fund forcing things such as police and fire cuts unless revenues are restored to a sustainable level.

That means if the current council this time around fails to have the political will to do the right thing, they will he hammered unmercifully at the next election while at the same time effectively laying waste to Manteca municipal services.

Go ahead. Figuratively tar and feather Cantu. He doesn’t care. Cantu has repeatedly made it clear he will push hard for the rate hikes as well as new taxes even If it means destroying his political career to save Manteca, so be it.

 

 This column is the opinion of editor, Dennis Wyatt, and does not necessarily represent the opinions of The Bulletin or 209 Multimedia. He can be reached at dwyatt@mantecabulletin.com