TMC: Thirty Miles of Corruption

Hidden taxes in Riverside?  = $180 million

Three layered taxes on your utility bill.

Yes, If you live in the city of Riverside and receive your electric and water bill from the city—You are paying hidden taxes.  Your city elected officials approved it!  Yes, In spite of your constitutional right to VOTE on any tax issue.  That is true. You have a right to cast your vote before the city raises or creates a tax.  Well they haven’t done that in decades!  Right again tax payers.  The city electeds don’t trust you to vote correctly.

They are scared of doing all the hard work to develop a new tax measure and don’t trust you to vote for it.  It must really bother them a whole lot because, they worked extra hard to develop a tax that looks like a normal rate for utility services.  The tax is described in the city charter article 12.04.  It says the City Council may transfer up to 11.5% of the utility Departments’ gross revenue to the general fund.  They call this a general fund transfer.  They also don’t say it is a tax.  However, state law limits sources of city general fund income to only tax revenues.  This is usually, sales taxes, property taxes, business taxes.  No fees or charges to recover costs expended by the various city departments during the year.

Wait a minute.  The utility bill is comprised of fees, rates and charges for electric, water, sewer, trash plus reliability fees and conservation fees.  All are limited to the amount necessary to recover the cost of providing the service to you.   Every dollar you pay to the city utility department is taxed at a minimum of 11.5%.  The city has never said it is not a tax or it is legal to make these general fund transfers.  It only says the city charter allows it.

How much real cash is going to the general fund as a hidden tax.  The annual budget audits show the last year our water payments sent (tax) revenue to the general fund of $5.5 million.   Our electric bill payments sent $50 million (tax) to the general fund.  But, there is more.  At the bottom of your bill is the Utility Users Tax.  It is 6.5% of your bill charges.  This is a tax upon a tax with an effective tax rate of 18.5%! 

But there’s more!  Yes, the electeds know best.  Your electric service and water service are charged in 3 and 4 tiers respectively.  This is called punitive pricing.  The more you use the more you pay.  It can only meet the constitutional test if the price you are paying is less than or equal to the city’s cost of providing the service.  This is another form of taxation hidden in your bill.  It is used to pay the debt service estimated at approximately $100 million per year.

That is $155 million per year of hidden taxes we all pay and we didn’t vote for any of it.

Oh, the Utility Users Tax, that is another $25 million per year!

Added up it is equivalent to $1,800 additional property taxes for every utility customer and we were not allowed to vote!

That is $180 million that we could be better utilizing if it stayed in the family budget.  How many families might have saved their home if this money wasn’t taken from them?  How many purchases at local businesses could have been made in the last 5 years?  How many dinners out in local restaurants or tickets to movies?  How many jobs could have been saved?

To the extent tiered water rates are imposed in a manner that deviates from “cost of service” requirements, those rates are in violation of Proposition 218  -Howard Jarvis Tax Payer Association