Las Vegas Sun

October 24, 2014

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Sun Editorial:

Paying our own way

Water Authority’s rate increase an example for the rest of the state

The Southern Nevada Water Authority’s plans to raise rates have run into some criticism, which is no surprise. After all, who wants to pay more? Under the leading proposal, homeowners would see their bills increase by $5 a month, and business rates would go up significantly more.

The increase would be in the form of a surcharge that would be added to users’ bills and the money would go toward paying off the authority’s construction projects, including the building of the third intake at Lake Mead. The authority is holding three meetings this week to discuss the plans, and there will undoubtedly be concerns and complaints over the rate increase. (As well, some critics will use this as a chance to attack the authority’s long-term plans to draw water from rural Nevada, even though that is a separate issue.)

It should be noted that even with the surcharge, water rates in Southern Nevada would be below average in the West. But there is a larger issue that shouldn’t be missed: The plan wisely changes the way the authority funds its operations, moving from the boom-and-bust growth cycle. There is a lesson in this for Nevada.

For years, the authority and governments across the state have operated under the premise that growth would pay the tab. Modern Southern Nevada was essentially created on the wallets of future generations.

As growth boomed — and roads, schools, water systems and other infrastructure projects were built — many expenses were pushed into the future. New residents and businesses, along with tourists and visitors, would pick up the tab, or at least a substantial portion of it.

That seemed to work just fine for many Nevadans because it lessened the financial burden in the short-term; again, who wants to see rates increase? Pat Mulroy, the Water Authority general manager, said Southern Nevada’s water rates have been lower than average among Western states because the growth here helped offset the costs.

However, since the recession, the torrid pace of growth that brought a stream of income to government agencies is just a memory and Nevada can’t bank on runaway growth to pay the bills anymore.

In political circles, that reality is painful because growth has long been a convenient panacea, warding off tax increases and other difficult issues. For years, politicians have avoided tough decisions because the economy always seemed to grow just enough so there was rarely a sense of urgency in dealing with the state’s underlying problems. There were plenty of pledges to deal with the problems in the future, but the future time never seemed to arrive.

That can’t be the way Nevada deals with things anymore. Without the hope of a resurgent boom, the state should be compelled to take responsibility, deal with its problems and find a way to do things like pay for infrastructure.

In the Water Authority’s case, no one wants to see a rate increase — it’s never pleasant and the fact that it comes during a sour economy makes it all the more distasteful. However, it is the fiscally sound thing to do. It will put the authority on more stable financial footing, and more than that, it sends a signal that Southern Nevadans are willing to pay their fair share — and prepare for their own future.

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  1. We should be doing everything in our power to renegotiate the water rights to Lake Mead and the Colorado river. California has been getting far too much for too long.

    Reducing California's share would go a long way to alleviating our water problems and eliminating the need to build pipelines from the north or a third straw. The time has long passed for California to accept responsibility for supplying its own water instead of raping Nevada and Arizona.

    After all, Southern California is every bit as much a desert as we are.

  2. SUN -- I see you mentioned nothing about that $62 million in water ratepayers' money the Supreme Court made the state give back to the local water authority. What happened to it, and how should it be factored in here?

    "The time has long passed for California to accept responsibility for supplying its own water instead of raping Nevada and Arizona."

    boftx -- we've been over this recently. There's an interstate pact about a century old covering how the Colorado is divvied up. Every time it goes to court it's basically a big can of worms.

    "I heartily accept the motto, 'That government is best which governs least'; and I should like to see it acted up to more rapidly and systematically." -- Henry David Thoreau 1849 "On the Duty of Civil Disobedience"

  3. HOA's beware, soon water bills will be drowning our budgets. We need a life raft. Right now we don't even have any water wings. Who is looking out for the HOA's at the PUC? Who is going to speak in support of the nearly 2,800 common interest communities here in southern Nevada?
    As a result of the cost of the third water supply straw being inserted into Lake Mead, every homeowner can now expect a direct increase in their residential water bills of at least $10 every month, $120 per year. In addition, our small association with very little grass has a 2012 budget for common area irrigation water set at $14,200. This was before the proposed new increase. With regards to community common area water costs (HOA's) here is what the proposed preliminary data shows:
    Plan one: The proposed commodity charge increase from 30 cents to $1.06 per 1,000 gallons will increase our small HOA's water cost (commodity charge) from our current $1,050 per year to $3,710, an increase of $2,660 per year.
    Plan two: Based upon our two common area one inch water meter lines currently billed as a "non-single family residential" the estimated increase would not go beyond $864 per year provided we are re-categorized and considered a "small business". If we remain strictly residential then this amount should be even lower. Note: had the initial cost to install water meters not been so high the developer could have added additional meters, perhaps with smaller water lines, thus reducing some of our costs, mostly based upon tier charges, forever.
    Plan three: A blend of plan one and two is estimated to be $373 per year, This calculation is still vague and it may not take into account that most HOA water costs are determined by the much higher cost tier four group. The total impact is still yet unknown. Tier four water cost levied per thousand gallons of water is much higher than those of the lower tiers. If our common area water usage were viewed in a more logical manner, that is on a per residential home basis, then our total common area irrigation usage and cost would be apportioned across all 128 of our homes. Thus our common area usage per home would average about 2,300 gallons per month. When calculated in this manner, a lower tier on average, it would result in a far lower cost than what we now pay as an association for our common area, mostly tier four, water. So what are the chances of this happening? Zero if we don't speak up. Our best options may be plan two or maybe plan three provided we are classified in these new rate proposals as at best a residential user or at worst reclassified as a not for profit small business which in essence we are both. We are a residential water user because we each simply contribute to the upkeep of our common areas and we are a small not-for-profit operation as described by statute in NRS 82. In any event we need to stay away from being sucked into a Plan one. Hope for the best and brace for the worst.

  4. You are paying more to keep the corrupt people in banking, development and politicians in the chips.

    Here is the game:

    Start a corporation. Get a tract of crap houses approved by in the pocket politicians and then get a HUGE padded bank loan from a tame banker to cover the padded expenses of building marginal houses.

    Use a bit of the loan to build marginal cracker box houses and while the rest of the money lasts give yourself and all your buddies HUGE salaries and company paid cars and boats and other perks. Invite your bankers and politician buddies and their significant others to come along for the ride. Make sure to give their significant others nicely compensated jobs as some kind of empty executive with your company and a leased Mercedes 500 is always a nice touch.

    If the houses do OR don't sell you strip the bank account and use "personal salary" washed money to fund a new corporation that is now the proud owner of some just acquired land options. Then declare one of your buddies the President of the new company that you will be an officer of....and later after stalling the creditors you declare bankruptcy on the old now worthless company.

    Then?

    Use the new company's land options (not purchased by the old company money but by your personal money) to get MORE useless water hook ups and houses approved by in the pocket politicians to get more padded loans from your tame banker to keep your new company and it's built in HUGE salary and perks going and going.

    A bad housing market and dwindling resources need not mean the end for the bankers and politicians and developers as they continue to profit and the people pay out the nose for more electric and water fees etc to keep the corrupt comfortable and on going.

    Now pay up chumps!

  5. The only thing I could add to Dennis Hill's assessment, is that there is nothing being done to control the inflated salaried of these "public utility" executives. Why, on God's green Earth, would or should, yet another rate hike be allowed, when the likes of Ms.Mulroy are getting ever-increasing huge salaries? How is this FAIR to the public rate-payers of a public utility?

    We would need to have top-notch, crackerjack representatives to go to court over the Colorado River water allotment. Do such people exist in Nevada?

    Blessings and Peace,
    Star

  6. No increases when the bureaucratic drones at Water Works can afford to flush 30 mil (and counting) down the toilet on the Springs Preserve boondoggle. Who holds those miscreants accountable for that fiasco? And just who is it that wants bigger government?