Grand Jury: Wean Special Districts From Tax Dollars

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Orange County’s 16 water and sewer districts should be consolidated into no more than six regional districts, and the majority of the county’s 27 special districts should wean themselves from a total of $183 million in taxpayer dollars they receive each year, according to the first report from the 2011-2012 Orange County grand jury.

Instead of taking 11 percent of all property taxes paid in Orange County, most districts should finance themselves through the fees they charge for services, according to the report, titled “Let There Be Light: Dragging Special Districts From the Shadows.”

“No logical reason exists for these agencies to continue to use tax dollars to finance themselves,” the report concludes.

The report is the latest in a long line of reports and reviews going back at least 40 years that criticize the system of special districts and call for reforms.

Government agencies are required to respond, generally in 60 to 90 days, depending on the agency.

The report goes on to state that most of the 27 special districts have outlived their original purposes and could be absorbed by the cities they serve or combined with other districts.

Water and sewer districts should be consolidated into no more than six regional districts, and water agencies operated by Anaheim, Fullerton and Santa Ana should consider consolidating with other agencies, the report recommends.

Cash and unrestricted reserves of the 27 special districts total at least $866 million and are “available to the governing boards to spend as they please,” according to the grand jury.

“Local citizens are not openly informed of this wealth when agencies ask for fee increases, special assessments, or bond measures,” the report states. “Most of the special districts do not appear to have specific criteria for amassing these reserves, nor do they have published long-range plans for their constructive use.”

According to the report, the Irvine Ranch Water District has the largest unrestricted reserve: $225,431,000.

The report observes that some districts didn’t show how property tax revenue was spent and urged the Orange County Board of Supervisors to require tax bills sent to taxpayers to clearly show what their property taxes are funding.

“The taxpayer deserves to know where the taxes are being allocated,” the report asserts.

“Costa Mesa Sanitary District, South Coast Water District, Trabuco Canyon Water District, and Yorba Linda Water District have nearly $35,000,000 allocated to them by the Auditor-Controller, but do not show this revenue in the budgets,” the report states.

“Some budget notes suggest that tax revenue was not included because of the uncertainty of the State financial condition,” the report notes. But, it adds, “the actual receipt of that tax allocation is not documented.“

The grand jury proposed that special districts be subjected to an independent performance audit at least every three years.

The report states that of the 27 special districts, only three currently receive no property tax support: Mesa Consolidated Water District in Costa Mesa; Serrano Water District, which serves Villa Park and parts of Orange; and the Municipal Water District of Orange County, which wholesales water to 28 agencies that serve most of Orange County.

Special districts largely are unknown to the public but have their own, often elected, boards of directors, serve specific areas and provide a special service, like water delivery to homes and businesses. Directors often collect up to $200 per meeting, and the districts have paid staffs. The system began more than 100 years ago as a way to provide needed services to isolated rural areas.

In Orange County, the two oldest special districts are the Buena Park and the Placentia library districts, created “by the vote of less than 100 voters in 1919,” the report states. They were formed to supply a source for books for people in the isolated communities.

“Today these cities have populations of over 84,000 and 52,000 respectively,” the grand jury noted, saying it was time for the cities to assume the work.

The grand jury recommended that the only districts to get support from county taxpayers should be the Orange County Cemetery District, which maintains county-owned cemeteries, and the Vector Control District, which runs programs to prevent the spread of West Nile Virus and other diseases carried by insects and rodents.

Please contact Tracy Wood directly at twood@voiceofoc.org and follow her on Twitter: twitter.com/tracyVOC.

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