Former Dept. Head Blows Whistle On City Govt.

Source: San Diegans Paying Concealed Tax Bill

POSTED: 11:25 am PDT June 9, 2004
UPDATED: 5:43 pm PDT June 10, 2004

SAN DIEGO -- Money collected from San Diegans in water and sewer bills is being used improperly according to sources inside and outside city government.

That money is supposed to pay for projects to prevent water main breaks and sewage spills that have been delayed for years, 10News reported.

Dennis Howerton used to be the supervisor for the San Diego County Water Department's Code Enforcement Division. He said the water department uses its funds to help keep other departments operating.

"The water department has been used to make up deficits in other departments," Howerton told 10News.

Howerton said he discovered money leaving the water department as far back as 1981, just three years after Californians passed Proposition 13 -- the property tax freeze.

Is the city circumventing Prop 13?

According to the Howerton, and other 10News' sources, the heart of the problem has to do with service level agreements.

The San Diego Water Department and the Metropolitan Waste Water Department use the contracts to send money to other divisions of city government that depend on taxes to survive.

The city's finance director, Lisa Irvine, said it is all above board and appropriate.

"The water and sewer funds do pay for general fund services, but they only pay for those services," Irvine said.

Over the past 20 years, critics say the use of SLAs has grown tremendously. Hundreds have been created in the past five years. And, sewer and water rates have continuously gone up over the past several years.

Howerton and sources inside the city, said millions of dollars have been funneled to the city attorney's office, parks and recreation and other departments.

Mike Aguirre, (pictured, left), a San Diego fraud attorney, said, "These service level agreements, you know even the language is a euphemism. They should be read as agreements to divert funds -- agreements to divert funds. That's what they really are."

Aguirre said the city has violated federal, state and city laws by misusing public funds by diverting millins of dollars to keep city government afloat.

"I think in many ways, what you have found here is a major breakthrough that many of us have been waiting for," Aguirre told 10News.

But, Irvine said 10News has not uncovered anything. She said every penny is accounted for appropriately and this is not an end run around the property tax freeze.

"We wouldn't do any type of shifting of money," Irvine said.

But, 10News' sources say it's a cover up, and they say department heads have been warned they are breaking the law.

"It was wrong then. It's wrong now. The fact that it's gone on for 20 years doesn't make it any less wrong," Howerton said.

Howerton left the water department after he said he got fed up with the misuse of public funds.