Rohnert Park, its finances now buoyed by the passage of a half-cent sales tax, is headed for a fiscal disaster unless it raises its sewer rates and it’s under pressure from its creditors to do so, city officials said.
The pronouncement virtually guarantees city leaders a battle with residents who in 2008 won a campaign to roll back the city’s rates to earlier levels.
“We put it to the vote of the people and the people overwhelmingly voted what they were in favor of, the city can’t just change that at their own whim,” said Larry Resnick, a signer of the ballot argument for Measure L, which cut rates back to 2006 levels.
Average household sewer rates in the city are now about $45 a month, the second lowest among the county’s nine cities.
City leaders said they must act quickly to raise those rates because the rollback cut revenues by so much — $3.4 million a year — that the city now is spending $10,000 a day from its sewer reserve fund to make up the difference.
By next year, the fund will be exhausted and the city will have to tap into its already stretched general fund, said John Dunn, the interim city manager.
The situation is “very dangerous and unsustainable,” Dunn told the City Council in a special briefing on the issue.
Councilman Jake Mackenzie said the gains the city realized from the sales tax voters approved in June will be reversed unless changes are made soon.
“Clearly by next year, without getting the rates to their proper level … we’re going to undo in one fell swoop all the good that Measure E ever accomplished,” Mackenzie said. Measure E approved the half-cent sales tax increase.
City sewer rates had been raised three times between 2006 and the 2008 election in which Measure L passed by a vote of 53 percent to 47 percent.
City officials said the increases were to expand the system’s capacity, to pay for the city’s share of the Santa Rosa subregional wastewater treatment system, and to pay off $13 million in bonds issued to replace aging pipes.
Now, as the bottom of the reserve fund comes into clear sight, the holders of those bonds are growing nervous and “asking for corrective measures, that is, substantial rate increases,” Dunn said.
Measure L supporters contended the city’s rate increases were being used to expand the system to benefit new development. They promise to fight any new effort to raise them again unless it is on the ballot for residents to decide.
“If they try to raise rates without taking it to the voters, we’ll go to court,” said John Hudson, an attorney and another Measure L campaign leader.
Resnick said if the city exercised more fiscal discipline it wouldn’t be facing the problem with the sewer fund.
“They’re spending money they don’t have,” he said. “If they got their budget under control, they wouldn’t have to keep coming back to ask for money.”
He shrugged aside the city’s argument that it is spending more than it is taking in precisely because rates were rolled back.
“They can make the books look like they have plenty of money or they don’t have enough, and they make it look like they don’t have enough,” he said.
The council’s water and wastewater subcommittee takes up the issue Monday at 4:30 p.m. in council chambers.
“It’s a dire, dire situation, we need to move on it,” said Vice-Mayor Gina Belforte, a member of the subcommittee.
In Petaluma this November, residents will be asked to vote on a ballot measure modeled largely after Rohnert Park’s Measure L and which seeks to roll back rates to 2006 levels.