Guest Opinion | Rick Cole: Pasadena Utility Rates Are Poised to Jump – But Can We Afford Them?

Next Monday, the City Council will hold a legally required public hearing on proposed sewer and refuse rate increases. Major increases are recommended for all classes of ratepayers. For example, over the next five years, single-family homeowners would see their refuse bills nearly double and sewer rates increase by more than 400%. 

This doesn’t take into account a proposed water rate increase that would more than double typical homeowner bills over the next five years – nor as yet undetermined electric rate adjustments currently being studied.

These big jumps are neither totally unexpected nor irresponsible. But neither are they immune from questioning.

Government speak can be deliberately opaque. To their credit, City staff have articulated the underlying factors driving up costs. Sewer rates have only been adjusted by the rate of inflation since 2007, yet staff maintains that the costs of maintaining and operating the system have increased well beyond that level, especially in recent years. Trash rate increases are primarily attributed to the added costs of complying with State mandates for organic waste recycling and the rising cost of vehicle replacements. Water rate increases are blamed on increased cost of imported water, higher system maintenance costs as well as reduced revenues due to the success of water conservation.

What’s not been addressed, however, is the impact on ratepayers, who do not expect their household incomes to double or quadruple in the next five years to pay for the run-up in rates. While water, sewer, trash and electric utility costs consume less than 10% of household income for average households, by definition many households pay a higher than average share of their budgets for these necessities.

Everyone knows that housing costs have dramatically increased for renters and recent homebuyers. Local property tax bills have also increased as voters have approved one-off bond issues for the Pasadena community college and school districts. That means the impact on individual households of rising utility rates vary widely. Some may be able to absorb the hikes comfortably – but it may impose a steep burden on others.

This means an imbalanced analysis of the cumulative impact of all these local cost increases. Staff has documented the case for increased utility costs, but not the capacity of residents (and businesses) to afford paying for those increases. 

That’s not new. Government officials have long simply argued that there is no other option than to pass on the cost of providing necessary services – either through taxes or rates. That’s true as far as it goes – but cost increases of this magnitude and duration should be subject to rigorous scrutiny. Moreover, how unequally those burdens fall on residents should not be ignored in the process. 

It’s likely that any citizens who show up to protest on Monday will get a polite hearing before the Council simply rubberstamps the staff’s recommendation. That would be unfortunate. Before imposing five years of steeply rising rates, the Council should ensure not only that a consultant has studied the rising costs of providing services – but has also critically examined whether those costs can be minimized through efficiencies or alternative service delivery approaches. Moreover, the Council should understand not only the impact on “average” households, but also the disparate impacts on those with limited incomes or subject to higher than average rates or rate increases.

That takes time and effort. But given the stakes, the time and effort would be well spent. During the months I spent talking to voters in District 2 during the recently concluded campaign, I encountered far too many voters struggling to afford to remain in their homes and apartments – and businesses and landlords caught in the vise of rising costs without the ability to simply pass on those costs as government does. 

In the next several weeks, the City will also consider adding a $200 million bond for seismic retrofit of the Library to the November ballot. The School District has already greenlighted a proposal for a $900 million bond as well as a separate parcel tax for operations on the same ballot.

The purpose of public services is ultimately to serve the public. We need sewer, water, trash and electric services – and libraries and schools. But if they aren’t affordable, what happens then? It’s not a question that public servants can afford to avoid addressing.

Rick Cole is Councilmember-elect for District Two. He is employed as the Chief Deputy Controller for the City of Los Angeles.