The Modesto Bee
Garth Stapley
December 08, 2000
Modesto's infamous utility money transfers gained an ally with a ruling by a Southern California appellate court.
But Modesto's transfers are not likely to resume, pending an appeal to the state Supreme Court.
The 2nd District Court of Appeal found nothing wrong with Los Angeles' practice of overcharging on water bills and transferring excess to the city's general fund, in a case published last week. Modesto used to do the same with water and sewer fees.
The Howard Jarvis and Stanislaus taxpayers associations sued Modesto, saying the practice violated a law passed by California voters in 1996. Proposition 218 prohibits charging more on property-related taxes than it costs an agency to provide a service.
Modesto City Council members agreed to discontinue the transfers and settled the lawsuit. But City Attorney Michael Milich followed the Los Angeles case and recently told the City Council of the appellate ruling.
The 2nd District Court of Appeal said water charges are not a tax or fee.
"The charges for water service are based primarily on the amount consumed and are not directly related to property ownership," the ruling reads.
Instead, the justices coined a term: commodity charges.
"What the heck is a commodity charge?" asked Tim Bittle, legislative director for Howard Jarvis Taxpayers Association, which sponsored Prop. 218. He noted that the proposition specifically covers water service charges, and said his association will appeal to the state Supreme Court.
The state's high court should decide within a couple of months whether to hear the case, Milich said. Until then, "we ought to wait" before discussing whether to resume transfers, he said.
In September, Modesto council members issued an explanation of the transfers — but no apology or rebate — in response to Stanislaus County grand jury criticism. Milich noted then: "I think it could be said we did lose the case in the court of public opinion."
At least one council member will not consider firing up the transfers again.
"Any hidden tax is a bad tax, period," Councilman Bill Conrad said. "Everyone should know exactly what they're paying for. I'll never support disguising a tax, and I hope no council member ever will again."
Councilman Tim Fisher, in an e-mail message, wrote that the transfers "may be legal but probably aren't ethical."
Bee staff writer Garth Stapley can be reached at 578-2390 or mailto:[email protected].
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