Pine Water Doubles Taxes, Boosts Water Rate 33%

Some 150 people attended a three-hour, Pine-Strawberry water district meeting on rates and taxes Saturday, but by the time the board voted to double the tax, only about 40 remained.

Some 150 people attended a three-hour, Pine-Strawberry water district meeting on rates and taxes Saturday, but by the time the board voted to double the tax, only about 40 remained. Photo by Pete Aleshire. |

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Ray Pugel

A sorrowful Pine-Strawberry Water Improvement District board Saturday doubled the district’s property tax rate and raised water rates by 20 to 33 percent, depending on usage.

Roughly 150 people crowded into the Pine Cultural Center for the three-hour budget hearing. Most people who spoke pleaded with the board to reduce the steep increases in both taxes and water rates.

“We’re damned if we do and damned if we don’t,” said board member Mike Claxton. “If we don’t fix it, there will be ropes from the trees out there and we’ll be swinging from them because you don’t have water. We’re not here to rape anybody. We’re here to give you water — quality water.”

But customer Pam Mason, who runs a watchdog group, said, “I am of the opinion that you have not always spent our money wisely. Do you want to drive people out? Because that’s what’s going to happen. Get back to reality and take care of the basics, you keep coming back to the trough for more money.”

Doubling the property taxes will bring in $625,000. Currently, the owner of a $200,000 home pays about $75 in property taxes to the district.

The increase in water rates will prove even more costly. Many second-home owners had during the budget deliberations complained about a rate structure that charges them $36-a-month for the first 3,000 gallons, whether they used any water or not. The new rate boosts that standby charge to $42 — and then charges $1.75 per 1,000 gallons for the first 3,000 gallons. The rates per 1,000 gallons increase with higher water usage. The rate for 3,000-6,000 gallons would remain unchanged at $7 per 1,000 gallons and the

rate for 6,000 gallons would rise from $8 to $9 per 1,000.

Most of the district’s customers will end up with a 33 percent rate increase, although those using more than 10,000 gallons would get a roughly 20 percent increase.

The budget totals about $3 million for operations, debt service and capital improvements — which is actually down from $3.8 million this year despite the increase in rates.

The board also approved a $7.5 million bond issue, but hastened to assure the befuddled customers that it probably won’t actually seek the bond issue to overhaul the leaking, dilapidated, outage-prone system until it completes a master plan. If the district relies on property taxes to repay the bond, it will need voter approval. If it relies on water revenues, it need not go to voters.

The district this year spent most of the $830,000 it carried forward from 2012-13. The carry-forward for the upcoming year would be just $75,000 without the rate increases, according to the budget presentation. Former Gila County manager John Nelson, a consultant to the district for the budget, said normal financial standards would include a $450,000 reserve for the size of the district’s budget. He called the district “a system at risk.” Despite all the work on the system of thin, plastic pipes and aging, improvised pumps and storage tanks, nearly one-third of the water pumped out of the ground disappears before it goes through a customer’s meter.

In the past two years, the district has acquired a series of new, sometimes controversial wells. But the big increase in the water supply from several new, deep wells had lifted a decade-long building moratorium and eliminated costly summer water restrictions and water hauling charges. However, the boost in the water supply has only increased the strain on the aging, undersized system.

The budget also included $175,000 to continue the process of replacing aging water meters. Previous budget documents have said meters generally under-report the water that flows into a home as they age. One estimate suggested that new meters would boost revenue by $150,000 — which would in effect also increase the average homeowner’s bill.

The 90 minutes of comments included many harsh comments.

One customer said, “Our families, our friends, our neighbors cannot afford these increases. It’s going to hurt the community as a whole. If I can’t pay my water bill, how are you going to make money? I personally feel raped financially by this board. I won’t stand for it. We have other options.”

Another customer said, “I don’t want my taxes raised. I haven’t had a raise in three years. This is just ridiculous. How do you guys expect us to pay you guys more money? My property taxes are already out of this world. I have a home in the Valley and I pay $800 (in property taxes). I have a home up here that’s worth less, but I pay $2,000 (in property taxes). A lot of people can’t afford this.”

However, the board majority adopted the proposed increases without change — saying it had no choice in the face of a $350,000 deficit this year, the exhaustion of the district’s reserves and the discovery that the system the district bought from Brooke Utilities was in far worse shape than they had imagined. Ironically, by the time the board members spoke to explain their decision some three hours into the meeting, the crowd had dwindled to about 40 people. “People want to talk to us — but they don’t want to listen,” said board chairman Ray Pugel. “We have limited water revenue and we also have a limited population. If we don’t have a contingency fund and we have a problem, how do we recover?” He pointed out that even water districts with up-to-date infrastructure have been raising water rates and that residents’ water rates for years have lagged behind inflation. Moreover, he pointed out that out of a $2,000 property tax bill, only a fraction goes to the water district. The property tax rate on a $100,000 home would go from about $65 at present to about $126 under the new rate, according to the budget presentation.

Board member Tom Weeks said, “We’re between a rock and a hard spot. We do not have the revenue to operate the way we’re going. I understand your wishes. I think we’re at a point now that we can’t turn back. This budget is at a bare minimum and we still don’t have enough revenue. We still don’t have a choice.”

Board member Richard Dickinson said, “If we don’t do this, we don’t have water and none of us will be here.”

He noted that an outage last summer cost the district $139,000 to repair, which played a factor in the reserves dwindling to $75,000. “If that happens again without any reserves, we go belly up.”

Board member Gary Lovetro said, “We’re pouring $500,000 a year into Band-Aids on a system that’s falling apart. If we don’t get ahead of this budget, we’re going to have another catastrophe this summer.”

Board member Ron Calderon said, “We’re all upset about having to raise rates on anybody. But when the original rate was put into place, we didn’t have complete information from Brooke.”

Only board member Sam Schwalm questioned the budget figures — and ultimately voted against it. He made one futile effort to amend the budget, suggesting that boosting the rate for replacing an existing meter from $300 to $1,200 seemed unreasonable and punitive to those who had their meter removed because they couldn’t afford to pay.

“Charging $1,200 for an already plumbed meter is kind of gouging the customers. If someone is $200 short and we pull their meter — all of a sudden they’re $1,400 short.”

However, his attempt to amend Lovetro’s budget motion spurred a confused discussion that ended with Lovetro refusing to accept the amendment.

Pugel then explained that the district wanted to raise the charge for reinstalling a meter to deter second-home owners from having their meters pulled in the fall to avoid the $36 monthly charge even when they’re not using water — now raised to $42.

“We have fixed costs we have to cover. I am empathetic to what you’re saying,” but this is a business and we have to run it like a business,” said Pugel.

Schwalm said, “This creates a lot of negative talk in the community. For the negativity it creates, I’m not sure it’s worth it.”

Schwalm also objected to the decision to double the property tax rate — in part to replenish the reserves. The budget plan called for spreading out the replenishment process from the property taxes over two years.

“I don’t think we should be using property tax to subsidize operations of the water system,” he said. “If you have hands in two pockets, you lose track of how much it’s actually costing you. Once you give politicians money, they’ll never give it back.”

He suggested the board trim from the property tax increase the $125,000 for the reserve fund. He said if the new meters really do boost billing by $150,000, “then I don’t think it was necessary to have the extra $125,000 in property taxes.”

The great majority of people who spoke also didn’t think that the district needed to impose such a sharp increase in rates and taxes — even though many, in the same breath, complained about leaks and outages the increases are intended to address.

“I am not on a fixed income, but my husband’s hours seem to get cut every week. I will be forced to leave Pine if this continues to happen,” one woman told the board.

Another customer agreed. “It’s going up. Where does it stop? If it’s not broken, don’t fix it. Not everything needs to be fixed. My water is worse than when this district took over. It’s more cloudy. It tastes bad. If there is a $7.5 million bond, I don’t feel comfortable giving it to this board to spend at its discretion.”

Another customer said, “I think you guys have done a fantastic job, but we have to have some give and take. This increase is huge: 33 percent is just too much. With a median household income of $28,000, it’s just not affordable.”

“We cannot afford this if you’re going to use the money like you have in the past. It hasn’t been frugal. A sand well is a sand well. This is a lot of money, you guys. I would suggest fixing the little leaks before they become bigger leaks. I’m against these raises.”

The speaker was referring to incidents when the district’s water turned up murky, which included several occasions when the Milk Ranch Well water had sand and silt. The district at one point shut down the wells to investigate the problem, which occurs when the wells pump above a certain amount of water. The district manager said the district continues to experiment with filters for the well, but that the district hasn’t had a “turbid” event connected to the Milk Ranch Well since October.

Another customer said, “We’ve seen how the different water companies progress‚ and now we’ve got this one. We should have more people on the board like Sam (Schwalm). It doesn’t make me very happy when we’ve got a bunch of people that act like the federal government: If it doesn’t work, raise the rates and raise the taxes.”

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Sam Schwalm

Comments

Pam Mason 11 months ago

When Mr. Dickinson spoke about the water outage last June and that the district spent $139,000 to repair it, you presume it was part of the old system. What they did not say was that the rework was needed on the brand new installation they had done for the Strawberry Hollow and Milk Ranch Wells they purchased. It would appear that whoever designed the system failed to install fail safe devices. Here is breakdown taken directly from PSWID minutes. The total expense associated with the emergency service interruption was $174,103.39. The expense breakdown was: Facility (MRW #1, Strawberry Hollow) $62,442.30 Critical Equipment Backup (pumps, motors) 36,682.97 Monitoring Equipment 1,964.53 Water Hauling 21,795.74 CH2MHill Emergency Billing (to pay in 5 installments) 51,217.85 Total $174,103.39

As for the turbid event it started months and months before and they dragged their feet before finally admitting that they found the Milk Ranch Well turbid. The public came forth with overwhelming evidence and again they could not blame that on the "old system"

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