DAVID WINSTANLEY: Is The City Of Mesa “Transparent” About Its Utility Bill?
By David Winstanley |
I recently conducted an informal survey among about 50 of my neighbors, asking them, “What do you think your City of Mesa utility payment is used for at the city?” Some said ‘water.’ Some said, ‘water and sewage.’ And a few said, “water, sewage, and trash.” But only 2 of 5o included ‘other city government services including police and fire.’ Those two individuals had been at an Encore Conservative Club meeting where we had discussed this exact subject.
I believe this simple survey is representative of the entire City of Mesa, where more than 90% of the residents are totally unaware that 30% of their utility bill is transferred from utility payments to the “General Governmental Fund” for the City.
According to the Oxford English Dictionary, there are two definitions of “transparency” that are relevant to this discussion: 1) the quality of something, such as a situation or an argument, that makes it easy to understand, and 2) the quality in something, such as an excuse or a lie, that allows somebody to see the truth easily. The current City of Mesa utility bill is not “transparent” according to these definitions because it does not make clear to those paying the bill what they are being charged for: 70% for city utilities and 30% for other government services. I would like to challenge the mayor, and city council to make Mesa utility bills more transparent by including exactly what is paid for. And I might also suggest that the 30% of utility bills for general governmental uses should not have sales tax applied to it.
Councilman Adams stated in the September 22nd council meeting that the City was transparent about this subject because “if you looked you could find it.” But I would argue based on the above informal survey that you have to know that you need to look and further, that you need to understand where to look! While I applaud the City posting a special link to proposed utility rate adjustments on its website, including dates of relevant city council meetings, an informative video, and an online comment card, the information is somewhat obtuse. A 164-page “Current Utility Rate Book” is not at all helpful for the average Mesa resident; the staff presentations from the September 22nd council meeting are helpful but take multiple steps in website navigation to find (if you know they exist there).
I want to be abundantly clear. I am not accusing anyone, council nor staff, of concealing or hiding anything. Council and staff are following the existing process. But it has taken me more than a year of making mistakes and misinterpretations to understand how the City works, including being politely but repeatedly corrected by city financial staff (thank you!). I am a former Director of Engineering who has managed budgets of millions of dollars. If it takes me this much effort to understand, what chance does the average resident have?
Even for those who know that their utility payments contribute to the general governmental fund, few understand the consequences of the rigid application of the 30%. Because it is a percentage applied to the total revenues, it means that there is an “automatic tax increase” due to the corresponding increase in General Funds Transfers every time there is a utility rate increase. The City Ordinance (#5559) does not require 30%, but both city council and staff very rigidly apply it each year. In past years, there has been no discussion of whether this tax increase is needed or not. It just happens. I would like to challenge the city council to hold that tax increase to zero (no increase, no decrease) for this upcoming year, rather than just applying the 30%; the net result will be 28.8% instead. This will have zero impact on utilities because their requested increases can be approved as requested.
But this proposal (to fix the Transfer to General Fund from Utility Fund) illustrates another complication: the value for the General Fund Transfer, currently shown as $147M, was set during the budget process in May/June of this year. So, any change now would require city staff to revise the budget. That’s not impossible but highly unlikely especially considering these funds are earmarked for public safety. Public safety funding can be held constant by using other funds such as Environmental and Sustainability.
Another place for unintended obfuscation is in the Debt Service Transfers, with a proposed increase of $18.7M or 16.1% for FY25/26. This line item covers paying for principal and interest on utility bonds. This is the biggest increase for this year and, all future years, based on the 5-year plan presented to the council. Debt Service Transfers total 38% over the next 5 years leading to a total projected increase of 51%! These bonds are approved in a wholly separate meeting in June by the council, so most of these increases are required or major construction projects will be stopped. Most residents of Mesa assume that they get to vote on “bonds,” which is true of bonds supported by secondary property taxes (and school bonds), but not utility bonds, which are approved by city council vote. What the average resident does not understand is that when utility bonds are approved at a council meeting in June, it is a commitment to increase utility rates for up to 30 years into the future. And we already have a commitment of 38% increases in the next 5 years!
Taken together, the General Fund Transfer increase ($9.3M), and the Debt Service Transfer increase ($18.7M) constitute 65% of the requested utility rate increase but are effectively pro forma because they were approved previously. While not at all hidden, is that transparent to the typical Mesa resident?
Finally, I do support the proposed “Water/Wastewater Capacity Fee,” which is related to the utility rate adjustments because if passed, it removes $400M in future utility bonds from current Mesa residents and instead charges developers and new growth users to pay for the additional capacity. If passed, this capacity fee will result in a smaller increase in this year’s adjustments but will reduce future increases even more.
One last picky comment: the utility rate adjustment presentations use a “typical user,” but the exact definition of which seems to be a pretty minimal water user. I would suggest that the city staff use a statistically significant definition by presenting a “median” user, someone for whom 50% of city water users pay (or use) more, and 50% pay (or use) less.
I hope there will be good conversations on these subjects at the city council meetings on November 17th, for introduction of the utility rate adjustments and December 1st, for the public meeting on utility rates.
David Winstanley is a retired Director of Engineering at Honeywell Aerospace, former Chair of LD15 Republicans, and a conservative activist for local issues in the East Valley.
