PUD backs off of Clarkston sewer takeover

Asotin County Public Utility District officials said a sewer operations agreement with the city of Clarkston is at an impasse over “an arbitrary tax.”

The city and PUD were moving forward with a plan to transfer operations of the wastewater treatment plant to the utility district until a 6 percent water utility tax emerged in recent discussions.

The city intends to charge the tax on water sales to customers within Clarkston’s city limits, and that could be a deal breaker on the sewer plan, PUD officials said at Tuesday night’s board meeting. Clarkston has not collected the tax since 1997, when the PUD disputed the legality of it, based on the law and court cases at the time.

After the PUD board of commissioners found out the tax was coming back, they instructed PUD Manager Tim Simpson to inform the city “the district will not be moving forward with the city sewer system operations agreement.”

“While they do not question the legality of your taxing authority, the commissioners feel that adding an additional 6 percent tax levy, on top of all of the other taxes levied by the city and state, goes against the spirit of what we are trying to accomplish with the operations agreement, which is to benefit your citizens and ratepayers,” Simpson said in a letter to Mayor Monika Lawrence.

An official response has not been drafted, but city officials have raised the issue of “gifting of public funds,” if the tax remains on the books and is not collected.

“The law is clear on this, and we do not believe it is a gift of public funds at all,” Simpson said.

Clerk Steve Austin said the city is researching the issue with the state and legal counsel, and no decisions have been made. No one from the city attended the PUD board meeting, and Simpson’s letter was not discussed in public at Monday night’s city council meeting.

Austin told the Tribune the 6 percent water tax may be a much smaller increase for customers than it appears, because the PUD already charges a utility tax. It could amount to less than 1 percent over current billing, he said.

PUD officials said the district wanted to help the city by assuming all of the liability of operating the plant and sewer collection system, taking on five staff members and, with ownership, eventually assuming more than $10 million in debt and the future $22 million in upgrades to the system.

The plan was going smoothly until the water tax was brought up this month, Simpson said.

“This really was gift-wrapped and sitting under the tree, just waiting to be opened,” Simpson said. “The water tax seems like a punishment to ratepayers, and it’s not good for our community to do this. We were willing to take on $32 million in debt and liability, and the city’s response was to tax our customers.”

The city currently charges a 14 percent sewer utility tax that flows into the general fund to help pay for city operations and vehicles. Adding another 6 percent water tax would amount to a 20 percent tax on water and sewer that do not increase the operational effectiveness or value of the system, PUD officials said.

According to the city, about $150,000 is paid out of the sewer fund for a portion of administrative salaries, and another $200,000 goes into the general fund.

Prior to the dispute over the water tax, city and PUD officials said the shift in ownership would be beneficial to the community for a variety of reasons. It would reduce the city’s liability for future upgrades and equipment replacement, and give the reins to an entity focused on water, wastewater and electricity.

Whether it moves forward will depend on the city’s response to Simpson’s letter. PUD commissioners said if Clarkston backs off imposing the water tax, they may consider further discussions or a joint meeting of elected officials to iron out any issues.

Sandaine may be contacted at kerris@lmtribune.com or (208) 848-2264. Follow her on Twitter @newsfromkerri.