When it comes to California water, nothing is easy

Camrosa Water District, a public services provider in Ventura County, gets its water from a combination of groundwater, recycled wastewater, and the State Water Project, which transports water south through the state.

Twenty miles away, another mid-size public water agency also founded around 1960 has a very different portfolio: Las Virgenes Municipal Water District gets virtually all its water from the State Water Project, which is managed by California’s Department of Water Resources. Groundwater in the vicinity of the Los Angeles-area provider is too salty and high in iron and manganese to be fit for human consumption, according to Las Virgenes general manager David Pedersen.

“Water is intensely local. It requires buried infrastructure, and water itself is very heavy. It necessitates a kind of very local control and management.” — Ian Prichard

In many respects, Camrosa and Las Virgenes are very different. But there are a few important similarities between the agencies.

This combination of the local water agencies’ autonomy and their distinct differences reflects the difficulty of imposing a change across California’s water systems.

And it’s creating a significant hurdle for the proposed Safe and Affordable Drinking Water Fund, an issue that is fueling increased debate in California’s water community and in the Capitol.

A view of the Camrosa Water District in Camarillo. (Camrosa photo)

Camrosa and Las Virgenes are able to dependably serve their customers clean water because they have access to reliable, high-quality sources and the means to treat water as needed. Like other water agencies in the state, they operate independently, relying mostly on revenue from customer fees to cover the costs of delivery, ongoing maintenance and debt servicing. When they get state money, it’s usually in the form of a loan for capital improvements, which the district typically has to pay back in full, or in some cases a grant.

“Water is intensely local,” said Camrosa Water Resources Manager Ian Prichard. “It requires buried infrastructure, and water itself is very heavy. It necessitates a kind of very local control and management.”

First put forward as Senate Bill 623, then later slipped into the governor’s 2018-19 budget as a trailer bill, the fund’s purpose is to cover an estimated $140 million each year in improvements and ongoing maintenance in water systems that are out of compliance with water quality standards, a number based on calculations by environmental consulting firm Blue Sky. Funds could go not just to construction of improvements like new water treatment plants, but also operation and maintenance, which loans and grants are not intended to cover.

Adding $1 to water bills sounds simple, but when it comes to California’s web of water agencies, no change is simple.

Under the legislation, the State Water Resources Control Board — which enforces California’s drought rules — would require roughly 1,100, largely public, water agencies serving residential areas, to collect a monthly charge amounting to $0.95 for most households and more for larger customers including some businesses. The charge would be reflected on roughly 9.4 million water bills, the board said, and only publicly- and privately-run systems billing more than 200 customers would collect it. This revenue would comprise most of the proposed fund, with the remainder of the fund slated to come from charges on agriculture. The bill requires a two-thirds vote in both houses of the Legislature, a threshold required of proposed taxes.

Adding $1 to water bills sounds simple, but when it comes to California’s web of water agencies, no change is simple.

The Association of California Water Agencies (ACWA), which advocates for its member public water providers, is the main opposition to adding the charge.

“To us it’s just crazy to turn … local agencies into tax collectors when this is a state problem and the state already has a tax collection system,” said ACWA deputy executive director Cindy Tuck, who oversees government relations for the association.

Camrosa and Las Virgenes are among 142 ACWA member water agencies that have joined the association’s coalition opposing the tax. In total, 440 public water agencies are members of ACWA. ACWA member agencies supply 90 percent of water used by households, businesses, agriculture and industry, according to the association. Some members, such as irrigation districts, don’t provide drinking water.

Some environmental groups oppose the bill, but on different grounds. Supporting the charge is a coalition of environmental, agriculture and social justice groups, as well as residents of communities that lack access to clean water. To understand why certain agencies think the charge is worth fighting against, it’s helpful to understand how water agencies work.

ACWA and opposing member agencies furthermore think putting the charge into effect will make it easier to place even larger state fees and taxes on water bills in the future.

Most California residents get their water from publicly-run water agencies that are led by elected boards of directors, the way public school districts are. Also similar to school districts, said ACWA communications director Heather Engel, these systems deal with unique challenges and needs, based on their particular makeup of water sources and types of customers they serve. Privately-run water agencies, which are fewer in California than those that are publicly-run, do not necessarily have elected boards.

Unlike school districts, board-led public water agencies operate mostly off revenue from customer fees. Those fees go toward systems’ operations, improvements and repairs. This model means that the larger a water system is, and the wealthier its customers, the more resources an agency has to meet user needs. It also means agencies that have boards are structured to be especially attuned to the preferences of their customers, who double as their boards’ constituents.

Customers are not happy when their rates go up, and retaliation against rate increases disrupts district management.

For example, customers voted three of Camrosa’s five board members out of office in the early 1990s over a new tiered billing system that increased rates. The general manager resigned after the election, facing criticism from upset customers and new members of the board. At the time of the board recall, some customers reported their bills tripled, according to the Los Angeles Times.

The new proposed charge of about $1 on most households is of less magnitude, but is still significant in comparison to normal rate increases. A $1.30 hike in monthly cost is around what customers can reasonably expect each year, said Camrosa’s water resources manager Prichard, so another dollar is close to doubling that increase.

Water agencies say the charge would be difficult to administer, too. Adding a new charge to bills can be onerous, said Eastern Municipal Water District Deputy General Manager Debby Cherney.

ACWA and opposing member agencies furthermore think putting the charge into effect will make it easier to place even larger state fees and taxes on water bills in the future.

Charlie Caspary, who has been on the board of Las Virgenes for 16 years, said limiting price increases is a duty his district has to its ratepayers. Advocating against something like the proposed charge is central to the Las Virgenes board’s mission. The board’s Legislative Policy Principles, which essentially comprise its platform, states the board will oppose collecting a state or federal tax or fee from ratepayers, and would oppose “proposals for a ‘one-size-fits-all’ statewide approach that would disproportionately affect the District’s ratepayers.”

“We have an elected board, and our districts’ rates are among the lowest of all adjoining water agencies in our area, and our staff works extremely hard to be efficient and to spend the customers’ money wisely,” Caspary said. “Our customers, if they’re not happy, do not have a choice. They cannot get another water service provider. We have to bend over backwards to serve them and provide for their needs.”

Water agencies say the charge would be difficult to administer, too. Adding a new charge to bills can be onerous, said Eastern Municipal Water District Deputy General Manager Debby Cherney.  She estimates the charge would cost her district at least $150,000, and says that the bill’s proposed funding wouldn’t fully cover the costs to the district of putting the program into effect.

The 67-year-old district is one of the state’s largest, serving 555 square miles and 816,000 people in Riverside County, and according to Cherney has an annual budget of at least $350 million. Her estimate of implementation costs accounts for adding a new line item to bills, programming customer income data into billing software, implementing measures to protect the new data and determining what to do about fees owed by customers who don’t pay their whole bills.

“It seems to me that you’re just providing a subsidy in perpetuity to a system that is not capable of running its system.” — Ian Prichard

Cherney’s estimate also includes the expense of determining which customers are exempt from the charge. The proposed legislation stipulates households making less than 200 percent of the federal poverty level would not have to pay the extra money. Water agencies don’t typically collect income information.

“That immediately brings up to me the potential for fraud within the system,” said Cherney, who is a CPA. She concludes that the level of difficulty in implementing the charge will vary by district, in part based on how old their billing systems are, how large their IT departments are and whether tech support is on site or outsourced. Her district’s billing system is 25 years old, she said. An agency with a newer or more standardized system will have an easier time making changes to billing.

The charge creates additional work for water agencies, and may upset customers. On top of this, opposing agencies feel it goes against a core principle of independence in water management.

When water agencies find themselves needing more water or water of better quality, they determine on their own how to do that and find the money to do so. Some that have had success with this level of autonomy see managerial failure as the reason other systems struggle, and see the tax as a proposal to throw money at a problem without forcing reform.

“It seems to me that you’re just providing a subsidy in perpetuity to a system that is not capable of running its system,” said Prichard, at Camrosa Water District.

ACWA has proposed that instead of adding a new charge, general fund dollars should be apportioned to improvements and maintenance in systems out of compliance with water quality standards.

The state water board identified 331 community water systems in California out of compliance with water quality standards as of November, serving about 500,000 state residents. A new state regulation restricting the permissible level of carcinogen 1,2,3-trichloropropane (TCP), which became effective in January, means the number of systems out of compliance and impacted state residents is actually higher. The November calculation also does not account for contamination of private wells and small systems regulated by counties. Ultimately, there isn’t sufficient data to come up with an exact total of systems or users affected by contamination, the Legislative Analyst’s Office states in comments on the trailer bill in the governor’s budget.

The circumstances of contaminated water systems are challenging. Many water systems suffering from quality problems are located in rural areas, serving low-income customers who are commonly immigrant farmworkers. Repairs can time-consuming, frequently needed, and too expensive for these small systems to build or even maintain, Water Deeply Managing Editor Tara Lohan has reported extensively. An example of repairs gone wrong is the Fresno County town Lanare, which Water Deeply reports couldn’t afford to maintain a $1.16 million arsenic treatment plant paid for with a federal grant. So even in cases where solutions are in sight, lack of reliable funding can stand in the way.

ACWA has proposed that instead of adding a new charge, general fund dollars should be apportioned to improvements and maintenance in systems out of compliance with water quality standards. This would simplify administration of the fund, said ACWA government relations lead Tuck.

“If the state implements this, it would just be one agency that’s responsible and they already know everybody’s income because of state income tax,” she said.

The problem with this proposal is that general fund money isn’t secure the way a dedicated fee or tax is, say advocates of the charge.

“Just because you have safe drinking water today doesn’t mean you have safe drinking water tomorrow.” — Jonathan Nelson

During financial crises, general fund programs are the first to face cuts by the Legislature. Plus, programs supported by the fund must go back to the Legislature year after year to make the case that they need funding, so even in flush years funding isn’t necessarily certain. That’s problematic for a program that pays for improvements to drinking water systems, efforts that will need years of stable funding before the legislature can see results, said Jennifer Clary, a water policy and legislative analyst for environmental advocacy group Clean Water Action.

The idea of adding a state fee or tax to water bills isn’t a new one, and has been floated in academic settings, sometimes as a “public goods fee” or charge. Some compare it to the California Alternate Rates for Energy (CARE) program that subsidizes the bills of the program’s participating low-income energy customers with revenue from a surcharge on the bills of other customers. Placing a state charge like this on water bills would be a first, said state water board chair Felicia Marcus, and she thinks it’s a workable solution at solving a gap in access to safe and clean water.

Laurel Firestone, co-executive director of grassroots advocacy organization Community Water Center, described the reaction of ACWA and opposing water agencies to the bill as “knee jerk.”

“It’s sort of like how people have a kind of set of principles that they just sort of cloak themselves in, and I think for the water sector, they have clocked themselves in ‘We will oppose state fees,’” she said. “And I think that’s rather than constructively looking at it as, ‘Let’s solve state problems.’ It’s become more of a knee jerk reaction.”

CWC Policy Director Jonathan Nelson similarly framed clean water access as an issue that impacts customers of all water systems. People traveling through California or relocating from one part of the state to another should be able to drink water wherever they find themselves without worrying about contamination, he said.  Plus, the gap in access that his organization believes the charge will solve is positioned to worsen as climate change exacerbates California’s volatile water situation. And systems currently out of compliance with water standards won’t be the only ones facing challenges.

“Just because you have safe drinking water today doesn’t mean you have safe drinking water tomorrow,” he said.
—
Ed’s Note: Corrects spelling of Cherney throughout.