Our cities and towns are struggling to stay above water these days, with good reason. When the Great Recession devastated tax revenues, the state reduced every funding stream it could to balance the budget during the worst economic crisis since the Great Depression. As a result, the local infrastructure necessary for economic growth has become the equivalent of a wish upon a star.
So it’s understandable that municipalities would scramble to exploit any potential avenue for raising precious tax dollars — and their target du jour is the special-purpose water or sewer district, which offers fresh revenue streams. So, yes, it’s entirely understandable. It’s also entirely inappropriate.
Here’s what makes it understandable:
These water and sewer special-purpose districts, when taken over by municipalities, can be used to impose utility taxes to fund anything a municipality deems important. Unlike statutory limits on private sector utilities such as electricity and gas (6 percent), there is no limit on the percentage of utility taxes cities can impose on their citizens; rates can run as high as 39 percent. It’s the equivalent of a blank check at a time when municipalities are flat broke.
Here’s what makes it inappropriate:
These special-purpose water and sewer districts were approved by voters for very specific purposes (which is why they’re called special-purpose districts in the first place). They were created by a vote of the people to provide the basic essentials of civilized life — sanitary water and sewage systems. As such, these districts cannot impose utility taxes on water or sewer services like cities do. They operate primarily from service rates charged to their customers and use the revenue only to build and maintain the water or sewer systems — the basic essentials. No voter cast his or her ballot thinking, “I’m going to vote for this so that anybody at any time can raise my taxes to fund anything they like without my consent.”
Yet that’s exactly what happens when a municipality assumes control of a water or sewer district. The voters lose control over how much they are taxed or how their tax dollars are spent.
That’s why I am sponsoring Senate Bill 5048. If this legislation passes, any time a municipality seeks to take control of a special-purpose district, the public will have the right to call for a referendum — to vote on whether the municipality can turn the taxpayers’ dedicated water and sewer taxes into a source of additional revenue.
My proposal is simply a basic component of representative government. But against the landscape of today’s limited dollars and municipal appetites, it’s urgent and essential. Without this safeguard, municipalities will be able to raise your taxes to pay for projects or services you never approved.
If you think that’s wrong — if you think that’s not what you voted for when you approved the creation of a water or sewer district — then you need to let your state legislators know now. Senate Bill 5048 needs to be passed and written into law before any more municipalities turn our basic necessities into a blank check for who knows what.
– By Sen. Maralyn Chase.
Chase represents the 32nd Legislative District