Proposition 218 and the Department of Utilities

On January 6, 2010 the Sacramento County Grand Jury issued a report regarding potential Proposition 218 issues and the City of Sacramento Department of Utilities.

The City of Sacramento and the Department of Utilities takes this issue very seriously. The Department has been working on its own over the past 3 years to address these issues and will continue to address the potential issues addressed by the Grand Jury.

To help address some common questions, please read below.

What is Proposition 218?

Proposition 218 was passed by voters in 1996. It specifies requirements for how utility rates for water, sewer, drainage and solid waste services are set and how the funds generated by those rates are used.

Some of the requirements of Proposition 218 include:

• Holding a public hearing prior to any rate changes for water, sewer, drainage or solid waste services and notifying rate payers of that hearing via mail at least 45 days in advance.
• Using funds generated by a particular rate, such as water rates, for water projects only.

What is the issue being discussed by the Grand Jury?

The City of Sacramento Department of Utilities became aware of potential issues with Proposition 218 in 2007 and has been investigating those issues with the help of an outside consultant and the City Attorney.

The Sacramento County Grand Jury recently completed a report looking at the potential use of utility rate payer dollars for community benefits, such as watering parks or purchase of property on behalf of other City Departments.

What is the Department of Utilities doing to address these potential issues?

The potential issues discussed by the Grand Jury and the issues being addressed by the Department are primarily historic in nature and stem from practices in place prior to the passage of Proposition 218 in 1996.

The Department has taken many steps to address these issues, such as adopting rates to require all rate payers to pay the same rates for water.

These issues are complex and often include gray areas that subject to interpretation. The Department of Utilities reported back to the Council on March 23, 2010 on the issues in the Grand Jury Report and on the progress made to correct those issues.

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