City Officials Shocked By 'Hidden Tax'
Exclusive Investigation Exposes Shifting Of City Govt. Funds

POSTED: 5:43 pm PDT June 10, 2004

SAN DIEGO -- An exclusive 10News investigation exposed a so-called "hidden tax" being levied on sewer and water bills. Now, there are even more disturbing revelations. Many of San Diego's elected officials say they had no idea it was happening, according to 10News.

From the mayor's office to the City Council chambers, elected officials said they were unaware that the money people pay on their water and sewer bills was being shifted by the millions into the city's general fund.

Donna Frye, a District Six council member, was outraged by the allegations.

"Where are those movements of money? How would I know when I look at the budget that this is being transferred from here and this is being put over here?" Frye said.

A number of council members are echoing Frye's concerns, according to 10News.

Council members said there have been no discussions of service level agreements, or SLAs -- agreements between departments to move sewer, and water money into the city's general fund -- in either the old or new budgets.

Critics called SLAs a way around the Proposition 13 property tax freeze.

Four council members, including Frye, Scott Peters, Jim Madaffer and Toni Atkins, said they had no idea millions of dollars were being moved from water and sewer funds into the city's main bank account.

City Manager Lamont Ewell denied requests for interviews about the so-called hidden taxes. Mayor Dick Murphy said he had no idea so much money was being used from the water and sewer departments.

"If we had the strong-mayor-council form of government, then the people in the water and sewer department would work for me. So, I would certainly have more authority about the way they run their department," said Murphy, who just introduced his plan for a strong mayor-council form of government on Thursday.

Frye delivered a letter to Ewell and the rest of the City Council calling for a public hearing and independent audit of the sewer and water funds.

Carl Demaio, the president of a San Diego-based watchdog group called Performance Institute, agreed with Frye about the audit.

"We have to have an independent audit of City Hall, not a bunch of downtown insiders with business and issues before the City Council and mayor looking at the books," Demaio said.

City Attorney Casey Gwynn did know about the agreements to use water and sewer money. His department received $1.6 million this year from the water department to pay for positions in his office. Gwynn said the legal services provided saved taxpayers millions of dollars.