Rostra Exclusive…. In plain English, here’s why San Diego Consumers pay
more for water, even as they reduce their consumption. Larry Stirling
says the answer is “Monopoly” and he has eyewitness testimony on where
we went wrong, and how to return to a rational and fair system.
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In 1969, fresh off of active Army duty, I was honored to go to work for
City Manager Walter Hahn and his Finance Director Larry Haden as a “budget
analyst.” I was blessed to be assigned to analyze Water Utilities Department
(water/sewage divisions) which made up nearly half of the city budget.
Size alone would have made such a “comers” assignment.
The department was accounted for as an “enterprise.” It was thus modeled
As a private business with its own revenues, distributive cost accounting,
Bond sales with indenture obligations, and a massive capital improvements
program. (This experience led directly to staffing the creation of and later
becoming Director of Finance at SANDAG.)
All seemed well and above board to me until one day I was summoned to the
manager’s office and told to draft a contract handing over Water Utility
land in the San Pasqual Valley to the San Diego Zoological Society for
the future Wild Animal Park another revenue producing enterprise.
I had already finished my first year of law school at Western States
University and had passed the “baby bar” so contract drafting was no
problem.
What was a problem was the section of the contract labeled “consideration”
or what the Zoological Society was supposed to pay for the such a valuable
site.
A “dollar a year” I was told. I pointed out at the time that this Violated the
“indentures” or contract provisions of our bonds. “Just do it.” Having a young
family, I did what I was told.
Just to make things worse, when I asked when the dollar would be due, the
answer was “from time to time.”
I am now wondering if the city ever got that dollar.
That is just one experience of many which proved that the city leaders
milked the assets and revenues of the utilities department to subsidize
and therefore mask over deficiencies in general-fund operations
………………………How The Increases Got Worse
Since that time, the public has learned that the city over charged for
Some services and under paid the utilities for others.
The Department also invented a series of financial compensation incentives
that fattened employee paychecks but did not simultaneously reduce public
expense the sole justification for such programs.
Most recently, we have been told to cut back on water consumption without
being told the obvious fact that saving water does not save money.
Reducing consumption provided by a fixed and growing overhead simply means
that the per-gallon usage costs will rise like clockwork as they have.
Irrespective of the efforts of former Assembly Member Richard Katz and
myself to create a system of water marketing in this state, water supply
remains subject to a series of government monopolies: State of California,
Metropolitan Water District, County Water Authority, and finally the City
Of San Diego.
Monopolies by definition are designed to reduce supply and thereby Increase
revenues to the monopolists. The California water system results in a host
of them grabbing as much as they can as the water flows by like all
historic banditti.
Government, though supposedly well intentioned, has exactly the same effect.
Institutionalize the provision of a commodity (water) within the double
whammy of a government monopoly and it is guaranteed that the costs will
rise and supply will fall exactly as is happening.
…………….Road to Reform…learn from Dr. Richard King
On a happier and instructive note, the Utilities Department was once
Headed for way too short a period by Dr. Richard King.
I received orders from Mr. Haden one day to go see Dick and help him solve
his “backlog problem” with a midyear budget adjustment we would take to
the council for approval.
Apparently the city management information system was reporting that
Utility repair crews were way behind on their work.
When I introduced myself to the Director in the Utilities Department
Headquarters, I explained I was sent there to help with the “backlog.”
To my everlasting pleasant surprise, he stated that he had no “backlog.”
How could that be? I asked.
He led me down the long hallway from his office back to the front door
whence I had entered.
He had personally posted the names of all of his utility crews and listed
their back logs on a separate sheet of paper posted along that long
hallway.
Each day, those crew members knew, he passed and reviewed those lists.
Knowing that their big boss was watching, each crew hustled to get their
back long down before the others. Within a few weeks…you guessed it. No
backlog. No extra money, no extra incentives.
Dr. King had cleaned up the backlog by taking a page out of “How to Win
Friends and Influence People” so fast that the city MIS could not keep up
with the current status.
Just as we you to say in the Army “command influence.” Isn’t that why all
those hotshot directors get the big bucks?
Of course when Dr. King left, the backlogs returned. So they have to raise
rates, again, and again, and again, and…..