OCWD to add state 'tax shift' onto cost of future groundwater

Calling state actions a shell game, the Orange County Water District board voted unanimously to add 100% of the property tax shift onto next year's water rates. Annually, the district receives $12.5 million in property tax revenue to, in part, manage operations to provide groundwater for 2.3 million residents in north-central Orange County. As a result of the tax shift, OCWD will lose $7.7 million in local property tax money. That's about a third of the district's entire operating budget...

FOUNTAIN VALLEY, CA, Dec. 10, 2004 (PRNewswire) -- On Nov. 17, the Orange County Water District board voted unanimously to add 100% of the State's property tax shift onto next year's water rates.

Annually, the Orange County Water District (OCWD) receives $12.5 million in property tax revenue to, in part, manage the district and provide groundwater for 2.3 million residents in north-central Orange County. As a result of the tax shift, OCWD will lose $7.7 million in local property tax money. That is about one-third of the district's entire operating budget.

"This is just another version of the old shell game on the part of the State," said Denis Bilodeau, OCWD board president. "Instead of living within their budget, the State is quietly shifting the burden of overspending onto special districts throughout the State, resulting in increased costs for their services. The result for OCWD is that water fees must be raised to maintain Orange County's water quality and reliability."

Due to the magnitude of the local property tax shift imposed on the water district, the low levels in the groundwater basin due to regional drought, increased groundwater use, increased cost of water supplies, and the district's low financial reserves, the OCWD board of directors has voted to raise the cost of groundwater an additional $24 dollars for each 326,000 gallons of groundwater purchased by the water retailers. The impact of this tax shift by the State government is an increase in the area of $0.60 to $0.70 on the average water bill in north-central Orange County. This increase will be effective in April 2005 and added to this increase will be additional costs from the district and likely funding increases from local cities and water districts retailers as well. The amount of additional fees will not be known until the spring when budgets are finalized.

"This is a grab by the state to obtain funds through a 'tax shift' that is really a non-optional tax increase on the residents and businesses throughout Orange County," stated Virginia Grebbien, general manager for the Orange County Water District.

Last year, the district under-went budget cuts, which resulted in personnel cut backs, decrease in the number of capital projects to provide future water supplies and other operational and maintenance reductions.

To help California out of its current financial downfall, the government has passed legislation to take $350 million in property tax money from local and county agencies for two consecutive years.

The monies will be redistributed at the State level to help with the current budget situation. Many local agencies will be affected by this tax shift. In particular, special districts including water districts will assume a large share of the overall tax shift. Agencies across the county and State have received notice from the Department of Finance that they will lose nearly 100% of their property tax revenue.

"The State legislation has now taken 30% of our 25 million dollar a year operating budget, leaving OCWD to make up the shortfall," stated Grebbien. "Unfortunately, over the last several years we have had to draw down our financial reserves to meet operating expenses during the current drought, so this tax shift can only be made-up by raising the cost of groundwater used by OCWD customers. This cost must be passed on to the local rate payers for the next two years to compensate for past State spending."

The Orange County Water District (www.ocwd.com) manages and protects the groundwater basin underlying north and central Orange County. OCWD is a special district, separate from the County of Orange or any city government. The California Legislature created it in 1933 to oversee Orange County's groundwater basin, which supplies more than half the water needs for 2.3 million residents in the cities of Anaheim, Buena Park, Cypress, Costa Mesa, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Palma, Los Alamitos, Newport Beach, Orange, Placentia, Santa Ana, Seal Beach, Stanton, Tustin, Villa Park, Westminster and Yorba Linda.

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