In California: Crocodile ‘Tiers’ Over Water Rate Ruling​

◼ Droughts may be caused by Mother Nature, but water shortages are created by humans. California is now paying the price for not building new storage and conveyance infrastructure over the last several decades. - Howard Jarvis Taxpayers Association

Last week the California Court of Appeal issued an important ruling interpreting Proposition 218, the Howard Jarvis Taxpayers Association sponsored initiative approved by voters in 1996. Proposition 218 is entitled “The Taxpayers Right to Vote Act” for a very good reason. It reflects the policy that those who pay the bills for public expenditures – taxpayers – should have the final say over how much is taken out of their wallets and pocketbooks.It subjects virtually all local taxes and fees, especially those related to property, to voter or ratepayer control.

Proposition 218 was necessary because the legislature and the courts had created loopholes in Proposition 13, the iconic California initiative that started the modern American tax revolt in 1978. While Proposition 13 was focused on property taxes, Proposition 218 was drafted to limit the explosion in other types of government exactions burdening homeowners including so-called “benefit assessments,” fees, charges and other sorts of property related levies.

What is important to note about Proposition 218, is that it did not ban property related fees but, rather, sought to return the imposition of fees like water, sewer and trash collection rates to the traditional concept of “cost of service.” Cost of service simply means what it says: The cost to a property owner for a service should not exceed government’s cost to provide that service.

In its ruling, the Court of Appeal concluded that “tiered” water rates, without being justified under “cost of service” principals, failed to comply with the constitutional mandates of Proposition 218. The lawsuit was brought by the Capistrano Taxpayers Association against the City of San Juan Capistrano for, among other transgressions, imposing water rates that were “tiered,” meaning those who used more water would be charged a higher amount per gallon.

The court ruling was immediately condemned by water agencies, state bureaucrats and even Governor Jerry Brown who decried the decision as putting a “straightjacket” on his policies to enforce water conservation. But the ruling did nothing of the sort. First, rather than saying all tiered water rates were automatically unconstitutional, the court merely stated that, whatever the methodology used to impose water rates, they must be based on cost of service.