Fees keep going up as many find themselves poorly equipped to pay them

By Joe Schoenmann

Sunday, March 25, 2012 | 2 a.m.

In about a week, Southern Nevadans will see a new fee on their water bills. The “reliability” charge will, for the average homeowner, mean an additional $5 a month.

It follows NV Energy’s 8 percent rate hike — equal to about $5 per month for the average customer — and $2 increase to its monthly service charge.

Late last year, the Board of Regents for Nevada’s university system jacked up student fees by 8 percent.

Lawmakers this month repealed a small business exemption to the state’s $200-a-year business license fee.

And over the next few weeks, the Regional Transportation Commission will hold hearings on recommended increases to bus fares.

Everywhere you turn, it seems, fees and other charges continue to rise, at a time many are least equipped to pay them. For a Southern Nevadan making average or below-average wages amid the worst recession in memory, even small increases can take a noticeable bite out of the budget.

It adds up. And it hurts.

Some, like Lorraine Hollender, are tempted to ask: When does it end?

The proposed hike in bus fares, “together with the increases we have already endured from the monopolistic utilities ... as well as the huge food and drug price increases, the puny 3.5 percent Social Security increase seniors received ... was wiped out immediately ... left us in a deficit,” she wrote in an email.

For each of these fee increases, there’s a reasonable explanation.

The Southern Nevada Water Authority can’t rely on connection fees anymore since construction has dropped off but still must repay bonds worth about $800 million to build a new pipeline into Lake Mead.

During the good times, NV Energy gained approval for a new power plant. The bad times hit, but it still has to pay the bill.

The small business license exemption, which costs the battered state budget about $10 million a year, should never have been granted, Secretary of State Ross Miller told lawmakers.

The RTC’s bus budget faces an $8.3 million shortfall unless something’s done.

The need for these increases stems from the same issue: People aren’t spending money like they once did, and governments and other entities are worse off for it.

“Everybody’s hurting, which is why you’re not getting the revenue increases,” Carole Vilardo, president of the Nevada Taxpayers Association, said. “People can’t afford to do what they used to do, buy what they used to buy.”

Fees, meanwhile, “are the one revenue generator that local governments have control over,” she said. “In good times, you have more fees than you need. Then, all of a sudden, you don’t have as many people using a service, yet you still have obligations to pay off” debt.

“It’s something that winds up becoming almost pervasive in a bad economy,” she said.

It happened in the 1970s, when Clark County raised business license fees during a recession, she said.

Brad Wimmer, an economics professor at UNLV who spent time at the Federal Communications Commission, said regulated utilities have little choice but to hike fees when a bad economy suddenly takes hold.

“They have estimates of demand and forecast usage, but when you’re hit with something like this where demand falls, the regulated firms have fixed costs that they have to recover,” Wimmer said. “Unfortunately, this may mean that rates have to increase.”

But voters don’t necessarily want to hear the explanation, which can be difficult for politicians who are usually held most responsible for fee increases. Public agencies are supposed to consider public comments before hiking fees.

Taxpayers facing fee increases often point to the salaries of well-paid agency chiefs, asking why wages aren’t cut before fees are increased.

Steve Sisolak, who ran his own business before being elected to the Clark County Commission four years ago, said it’s a good question, but it’s a difficult one to answer and address.

“We have to try to reduce compensation packages, but it’s difficult because they (public employees) are taxpayers, too,” he said. “But the consumer keeps getting hit with all these little fee increases ... which lead to significant hardships on everyday working people.”

Sisolak, Vilardo and Wimmer say there’s a clear way to stop the fee increases: The economy improves.

A better economy increases tax revenue, which diminishes the need for fees. It’s that simple. And that hard.

Because no one has a magic wand that can turn Nevada’s economy around overnight, it’s likely a long haul.

To get there, Southern Nevada needs to make it easier for businesses to come and to do business with less red tape once they get here, Sisolak said.

“We’ve got to get something manufactured here, something distributed from here, jobs that are high-paying jobs with benefits so we can increase the property tax base; that’s our only way around this,” he said. “Many times, government gets in the way.”

Vilardo said agencies should budget with an eye five years into the future, including building reserves so sudden economic downturns don’t lead to fee hikes. Agencies should also be cautious when taking on debt.

“You need to go out and see if the expenses you are obligating yourself to are sustainable for the next five years,” she said. “Then you measure it, you watch it carefully, and if you’re not keeping up, you adjust your budget.”

That might help in the future. But it won’t keep that $5 reliability fee off your next water bill.