MODESTO -- Modesto Irrigation District officials on Thursday announced that they would publicly discuss next week a 17-year money transfer that could be illegal, then just as suddenly postponed the item.
Also Thursday, the district released year-to-year numbers showing that electricity customers have paid $89 million extra since the fee was imposed in 1995.
That's a yearly average of $5.2 million charged to 113,000 power customers to keep 3,100 farmers' irrigation rates artificially low.
An attorney hired by the district said that might violate state tax law approved by voters two years ago, in a legal analysis reported in Thursday's Bee.
"It's very much on our radar screen and has been all along," said MID board Chairman Tom Van Groningen. "We know what needs to be done; we just haven't done it."
He and the late Chuck Billington, who died in a 2006 airplane crash,wanted to even things out by raising irrigation rates in 10 percent increments in years past, but were stymied by a board majority favoring farmers, Van Groningen said.
Some farmers believe they're owed something for having established the district.
In a letter to the editor appearing on Page A-12 of today's Bee, farmer and hydrologist Vance Kennedy says everyone benefits when farmers irrigate because water seeps down, replenishing underground sources. He figures the benefit at more than $14 million per year, computed at the rate that San Francisco might have paid the MID for water if the controversial proposed sale had not been abandoned.
"Any mention of electric payers subsidizing farmers must take into account the important subsidy that the electric rate payers get from the farmers," Kennedy wrote.
The lawyer advising the MID said the district has made little effort to justify the power surcharge in a way that would satisfy Proposition 26. That 2010 statewide initiative closed an electric utility loophole in Proposition 218, which requires a connection between services and their true costs, and voter approval to raise taxes.
That law was cited when the Howard Jarvis and Stanislaus taxpayer associations sued Modesto in 1998, saying the city illegally overcharged people for water and sewer services and sent the extra money to the city's general fund. The city initially put forth an argument similar to the MID's — that water and sewer funds in theory owed the general fund for providing utility loans decades before.
City leaders put an end to the $3.3 million-a-year transfers and agreed to reimburse $7.2 million to the water and sewer funds over time.
Van Groningen has said MID board members discussed their predicament in closed session because they expect to be sued.
"That is a fully anticipated, logical sequel to this," he said.
The board will meet at 9 a.m. Tuesday at the district office, 1231 11th St., Modesto, to discuss creation of a committee to explore options to raise millions of dollars for water infrastructure and canal system improvements.
The issue is an outgrowth of the San Francisco water sale proposal and is linked as well to the emerging subsidy controversy, Van Groningen has said. But specific discussion of the subsidy was canceled without explanation Thursday afternoon.
Bee staff writer Garth Stapley can be reached at gstapley@modbee.com or (209) 578-2390.
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