Watermaster fee hikes 'not legal'

Issue Date: September 15, 2004
Kate Campbell

A decision about whether farmers and ranchers will have to pay whopping fee increases for watermaster services provided by the state has yet to be decided. Discussions are under way, however, between the Schwarzenegger administration, the state Department of Water Resources, county auditors and affected land owners, as well as California Farm Bureau Federation and other interest groups, to clarify issues and justify the cost increases.

Legal experts consulted by CFBF say the current boost in DWR's assessments isn't legal. Farm Bureau also points out that there are many unanswered questions about how the cost of watermaster services are calculated and how the program will be administered now that land owners are required to pay the full cost of a service that provides benefits not only to them, but also to the state as a whole through protection of its water resources from over-diversions on adjudicated streams.

Farm Bureau's legal experts found the state Department of Water Resources issued certifications for the increased fees to appear on county property tax bills before the governor actually had signed legislation permitting such action. DWR sent notices of the fee increases to counties on Aug. 5, but Senate Bill 1107, a trailer bill supporting the state's 2004-2005 budget that contained the fee increase provision, wasn't signed until Aug. 16.

Although the fee increases are statewide, it mostly affects property owners with adjudicated water rights in Butte, Lassen, Modoc, Napa, Plumas, Shasta, Sierra, Siskiyou and Tehama counties.

"DWR issued certifications that aren't valid because they're based on legislation that hadn't yet been signed into law," said attorney Marty Dakessian, former staff counsel for the state Board of Equalization and an expert in state and local taxation. "County auditors who accept these certifications as valid, knowing all the while of their invalidity, have the authority‎and the legal duty‎to refuse to adjust their respective assessment rolls to reflect the apportionments."

Dakessian said that if county auditors accept the state's certifications under these circumstances, "they're in violation of the law themselves and may be personally liable to each affected taxpayer."

Given this situation, Farm Bureau strongly encourages those who pay watermaster fees to communicate with their county auditors as soon as possible to express their concerns about the watermaster service fee assessments on their coming property tax bills.

"Time is of the essence on this matter," said CFBF Water Resources Director Tony Francois. "Since the county auditors have very little time remaining to them before they have to decide whether to include these assessments in the next tax bill, they need to hear from us immediately."

For years the costs of state-provided watermaster service were shared equally between those who use the service and the state, because each benefited. For the past decade, the Department of Water Resources has reported those program costs to water users at about $400,000 a year, but now the department inexplicably says the costs for the 2004-2005 program will be more than $1.5 million.

Francois said the fees for watermaster service are "being bumped up to reflect what the state says is the 'true' cost of providing the service. And, besides the fact that the increases are illegal, there also does not appear to be a great deal of confidence in the historical accounting methods and practices used to arrive at the current fee levels."

Siskiyou County businessman and rancher Jim Wilson is a member of the executive committee of the local advocacy group called "Save Our Shasta and Scott Valleys and Towns," or SOSS.

He said DWR has not "supplied us with accounting practices and procedures we can hold them accountable for because we don't know where the numbers were derived from."

Wilson said he thinks the kinds of accounting practices employed by DWR to later explain exorbitant increases in watermaster fees probably aren't unique and that other state departments are undoubtedly attempting to cover budget shortfalls by jacking up fees to those who use state services.

"We're in a budget crisis," he said. "I think all of them are concerned with their departments. They're concerned with their employees' jobs and they're attempting to balance this any way they can. Unfortunately we carry the balancing of this through taxation in the form of illegal fee increases.

"Now, when they have the option to pass on or transfer costs that they have been responsible for the past, in my opinion, they have to be absolutely prudent and exact in doing that," Wilson stressed. "That has not been done in this case. If we do not have a fair and balanced accounting, then we will need to take action to hold the agency accountable."

When asked about the accuracy of the watermaster program's accounting, Mark Cowin, DWR's Planning and Local Assistance Division chief, said, "Accounting procedures aren't my responsibility. The watermaster program is in two of the districts I manage and they would be the ones who could speak to the accounting practices."

He said the broader question being asked, however, is how the watermaster fees came to go up so much and how the department decides when it's going to use funds from one program to help out another.

"With much heightened responsibility, we were forced to implement improved measures to tighten up the watermaster program accounting due to the ESA (Endangered Species Act) crisis," Cowin explained. "We don't have the authority or discretion to simply take funds that are authorized for one purpose and apply them wherever we feel.

"But in this case, we had funds in our Northern California water management program, which is one of the highly valued programs in my division because of the flexibility it provides to us. It basically is set up to provide us pretty broad authority to do a variety of things to the ends of assisting regions and local agencies and local governments in managing their water supplies.

"Those funds were available to us in the last two or three years to apply to the watermaster program and help us enhance those programs such that we could deal with some of the ESA issues and continue to meet the needs of the water users. Unfortunately, it came as a surprise to many water users that the actual costs are as high as they are to run the program."

When asked about the variability of administrative costs from one Northern California watershed to the next, Cowin said, "I can't speak to the specifics. Administrative costs are billed through our northern district headquarters in Red Bluff. Hourly rates would be the same.

"What I suspect it comes down to, however, is that it's expensive to hire civil servants. I think we'll all have to collectively consider whether we can really afford for civil servants to be doing this type of activity."

It's unclear whether hiring outside consultants to provide the watermaster service might lead to the elimination of positions and employee layoffs, Cowin said. That would pose administrative challenges for his division and its employees, he said, especially because places like Red Bluff usually don't offer many jobs with pay and benefits commensurate with those paid by the state.

"For farmers and ranchers who are paying for the service, it's their choice," Cowin said. "The question is whether the costs are worth the benefits. When the state has historically provided 50 percent of the costs, the state had more to say about it."

The figures DWR is citing to justify the watermaster fee increases require close examination, Francois said.

"For example, some of the charges being increased for water users in Siskiyou include operations and maintenance costs for stream gauges that I'm told are not used to administer decrees," he said. "Instead, they're used to establish baseline flows for coho salmon."

Francois said he was told DWR was supposed to prepare an explanation of the increase in the cost of watermaster services back in June, but this was not done. He said Farm Bureau continues to work with state officials, Farm Bureau members and other interested parties to gain a better understanding of this enormous fee increase and the workings of the state's watermaster service.

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.

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