Property Taxes
PROPERTY TAXES
SUBSIDIZE EID RATES:
EID annually
receives some $10.4 million of Property Tax revenues from El Dorado
County which EID uses to subsidize rates. Without these Property
Tax subsidies, EID’s already “sky-high” residential Sewer rates would be
an additional $202 higher annually… or $979 annually including
Property Tax subsidy. Contrast this to the $777 that
EID reports. Similarly, average annual residential Water
rates would be $171 higher… or $697 per year in total. (Source: Derived
from Draft Rate Models
in January 24, 2011 Board package)
SEWER CUSTOMERS PAY
MOST:
More than 75% of Property Tax
revenues come from EID customers receiving both Sewer and Water
services, while under 25% come from EID customers who only receive
Water-only services.
EID DIRECTOR
THREATENS SEWER CUSTOMERS:
At least one
EID Board member is advocating changing EID’s present Property Tax
allocation methodology from 60% Water/40% Sewer, to a 100% allocation to
Water. Such a change would
increase total Sewer/Water residential rates to more than $1300
annually, while decreasing Water-only average residential rates to
approximately $350 annually.
EID PROPERTY TAX
MYTH:
This same EID Board member
continues to propagate a long-standing myth that the reason EID receives
Property Tax revenue is because it is an “IRRIGATION” district.
Yet South Tahoe PUD (which serves more Sewer customers than Water
customers) also receives Property Tax revenues from El Dorado County.
The REAL reason both EID and South Tahoe PUD receive these Property Tax revenues is
because BOTH are “SPECIAL” districts. (Note: EID first received
Property Tax revenues in the early 1950’s, when it received a mere
$28,000 in Property Tax revenues. Yet, this EID Director now
proposes to allocate $10.4 million annually based on how just $28,000
was allocated in 1953.)
SEWER/WATER CUSTOMERS
ALREADY SHORTCHANGED:
The current
Property Tax allocation methodology slightly shortchanges combined
Sewer/Water customers, albeit to a modest degree.
PROPOSITION 218
COMPLIANCE PROBLEM:
If any change is made
to the current Property Tax methodology, it should address a major
Proposition 218 compliance problem: EID’s current rates subsidize $8.0
million interest cost annually on $137 million of excess facilities
capacity for “future customers”…in violation of
Proposition 218 proportionality requirements. Current customer
rates include this extra interest cost which many current customers will
never recoup.
FixEID's PROPOSED
SOLUTION:
By using Property Taxes to
pay for “future customer” financing costs (instead of including “future
customer” financing costs in current customer rates) would eliminate
this Proposition 218 compliance violation. All amounts above this
$8.0 million annual financing cost could be used to amortize a portion
of the $137 million FCC “Accounts Receivable”, thereby replenishing
restricted FCC reserves wrongly diverted to past operating costs.