MWD Board Puts Rate Hike on Hold : Utilities: Agency directors tentatively agree to delay proposed increase. They also order budget cuts.

In a major break with their staff, directors of the Metropolitan Water District on Thursday voted to tentatively delay a proposed rate increase and ordered management to come up with additional budget cuts to close a projected $350-million funding gap.

Directors also instructed the staff to hold any rate hike request to about 20%--or about 90 cents per month on the average household bill. The staff previously had sought up to an 80% increase in rates.

Worried about a consumer backlash in a bleak economy, directors indicated that they are willing to drop billions of dollars of long-term capital projects because of short-term money concerns.

But that, staff members cautioned, could threaten the security of Southern California’s water supply in an era of unprecedented population growth. The MWD supplies about half of the water consumed by 15 million residents of a six-county region extending from San Diego to Ventura County and inland to Riverside.

“There’s a substantial cost in ensuring a reliable water supply,” said Carl Boronkay, MWD general manager. “But there’s also a cost in not having a reliable supply.”

Despite such warnings, directors said they must pare down the MWD’s $800-million budget in anticipation of the public mood after five years of drought and increasing restrictions on water use.

“We have to consider how the public reacts to this,” said Director S. Dell Scott of Los Angeles. “I don’t care what we do, we’re going to be damned even if we have a modest increase, because it will be viewed as punishment” for conservation, he said.

Scott said the budget-cutting has to be more than symbolic. “I’m not talking about the fine touch of a surgeon’s scalpel, but the blunt end of a meat ax,” Scott said.

The directors were gathered for an unusual joint meeting of three key board committees that are to consider the looming budget gap. Their near-unanimous decision to push any rate increase back to July from next March must be approved by the full board of directors next month.

With 36 of the board’s 51 directors present at the meeting, it appeared that the tentative decision will likely be upheld by the full board.

But Director Mike Gage warned: “There’s not much inclination on the part of the Los Angeles delegation to vote for any rate increase, period. And there is not likely to be any such inclination until we see some momentum on downsizing our needs.”

At the same time directors sought to scale back the proposed rate hike, they tentatively agreed to impose about $50 million in new real estate fees in an effort to diversify the agency’s revenue sources.

The exact terms of the fee are to be determined, but it would take the form of a fixed annual charge on a per-parcel or per-acre basis.

That proposal, however, may have even more difficulty getting the approval of the full board.

Gage said the Los Angeles delegation will oppose imposition of the new fee. “Water ought to reflect its true cost and not be hidden from the public as a property tax,” said Gage, president of the Los Angeles Department of Water and Power Commission.

The rift between the board and the staff took on bitter tones Thursday, as some board members said they were insulted by the management proposals to boost rates and cut “pork barrel” local projects.

“It’s a knee-jerk, bureaucratic response, and it’s not flying,” said Christine Reed, a director representing Santa Monica.

MWD Chairwoman Lois Krieger of Riverside attempted to cool the tempers. She said people have compared turning the MWD around to turning a supertanker around. “But let’s not have a mutiny while we’re at it,” she cautioned.

Still, asserting their authority in an unusually vocal fashion, the directors continued to deride the staff proposals.

Herbert Stickney, a director representing San Diego County Water Authority, said the staff plan to cut local conservation and water reclamation programs while keeping major pipeline and pumping station projects was “penny-wise and pound-foolish.”

Director Dale Mason of San Diego said: “These local projects should be considered absolutely sacred to our goals.”

Director John Morris of San Marino agreed that “these are nominal expenses today . . . that will allow us to eliminate or downsize future projects.”