Stockton closer to privatizing
Council OKs negotiations with utility-services firm

By Cheryl Miller
Record Staff Writer
Published Wednesday, December 4, 2002

Stockton's City Council pushed ahead Tuesday night with a proposal to privatize operations at the city's water utilities by directing administrators to draft a final contract with OMI-Thames for review and possible approval early next year.

A five-member council majority -- Mayor Gary Podesto, Vice Mayor Gloria Nomura, and council members Gary Giovanetti, Leslie Martin and Larry Ruhstaller -- authorized final contract negotiations for a 20-year, multimillion-dollar agreement to run Stockton's water, wastewater and stormwater systems.

But the same majority that consistently has driven privatization efforts showed signs of cracking Tuesday when Ruhstaller broke from his previous position and voted to give Stockton residents the final say on any utilities contract.

"Once we as elected officials have studied this issue and hopefully have the questions answered, ... then we should say where we stand on this issue, whether we feel this contract is in the best interest of this city, vote it up or down and then take it to a vote of the people," he said.

Ruhstaller compared a public vote on privatization to this year's campaign efforts to persuade voters to defeat two utility-tax-cut initiatives.

"If we were able to do that, we should be able to take this extremely complicated issue and explain it to the people in ways so they can understand that we're not trying to ram anything down peoples' throats," the second-term councilman said.

Ruhstaller joined council members Ann Johnston and Richard Nickerson, who both voted against authorizing contract negotiations, in attempting to make any council contract approval contingent on a public vote. The remaining four members rejected the motion, resulting in one of the few 4-3 votes the council has cast on the issue.

Ruhstaller then pledged to lobby a fourth and deciding council peer "over the holiday season."

The full council did agree to host at least one public forum on a potential utilities contract before voting to sign or reject it.

"Until there is a contract with the words on paper, we really don't know what the deal is," Martin said. "I want to get input from the public."

Dozens of privatization opponents crowded the council chambers and spilled into a foyer Tuesday night, urging decision-makers to slow or end contract talks.

"You have not been given all the information in a timely manner in order to justify a vote tonight on entering into a 20-year contract," said Dale Stocking, who belongs to a group that gathered more than 18,000 signatures to put the privatization issue on the March 2003 ballot. He and others, including Nickerson, contend that the council is trying to complete a contract before the March election.

"Many necessary and required steps in the process are being skipped in order to push this through to a signed contract before the citizens' initiative can take effect," Stocking said.

A number of contract issues still need to be resolved, including service levels, staffing, and the salary and benefit levels of public employees who would become OMI-Thames workers under the deal.

A city-hired consultant did attempt Tuesday to answer the long-standing question of how much ratepayers would save under a private contract. James Binder, president of Alternative Resources Inc., said a review by his company and the city showed an average household with a monthly bill of $44 would see an average annual rate increase of 7 percent to 9 percent with OMI-Thames.

Cost increases would be approximately four times higher under the city's current operations, Binder said. Rates under both scenarios would rise because of the costs of required wastewater upgrades.

In other action Tuesday, the council agreed to ask voters in March to designate all the money generated by Stockton's 8 percent tax on utilities to the Police and Fire departments.

Earmarking the estimated $34 million in annual taxes would not raise or lower the amount of money that flows to public-safety agencies or any other city departments. Utility tax money now spent on parks, libraries and other city divisions would be replaced by other revenue sources that had been devoted to public safety.

The action would appear to make the utility tax a less-appealing target for city critics seeking to cut the levy at the ballot box. City officials have not curbed plans to reduce the utility tax gradually in coming years and hope to replace the lost revenue with increased sales taxes and other revenue sources.