MWD Keeps Parcel Tax, but Scraps Service Fee : Water: Landowners face an annual levy of $5 per lot or acre. State attorney general ruled that imposing both charges was illegal.

Bowing to legal obstacles, directors of the Metropolitan Water District voted overwhelmingly Tuesday to rescind a controversial $25-million “service availability charge” it planned to levy on smaller water agencies throughout Southern California.

The board, however, voted to retain a $25-million “parcel tax” that will be charged to millions of landowners in the MWD’s giant six-county service area.

The vote followed a legal ruling by the state attorney general, who found that the MWD cannot impose both a service charge and a parcel tax at the same time. “Either one or the other may be chosen by the board, but not both together,” the attorney general concluded.

The water agency, which supplies 60% of the water consumed in Southern California, adopted the two charges in May to firm up a budget ravaged by low water sales during the continuing six-year drought. The new fee and tax followed the adoption in March of a 21% rate hike that went into effect July 1 and is expected to raise about $80 million annually.

The two new charges were opposed by taxpayer groups and state Sen. Ruben Ayala (D-Chino), who sought the attorney general’s opinion and introduced legislation to overturn the revenue scheme.

“It’s a victory against big government,” Ayala said Tuesday. “There’s not a more powerful water district in the United States. To get them to back off is no easy task.”

But not everyone was happy with the outcome. Linda Grau, director of development for the Orange County Libertarian Party, demanded that the board rescind both charges.

“This big, fat government bureaucracy is sucking up our lifeblood,” Grau told the directors. She said even the parcel tax--levied at the rate of $5 a year on each lot or acre--”is too much.”

And though the 51-member board, on a voice vote, overwhelmingly approved dropping the service charge and keeping the parcel tax, its key Los Angeles contingent opposed the move.

Directors from Los Angeles argued that the tax is not fair to the city--which uses little MWD water in comparison with the number of landowners who would be taxed.

Los Angeles directors favored keeping the service availability charge, which is tied to the amount of water an agency actually uses.

“It’s time for us to come up with some reasonable alternative” to the tax, said S. Del Scott, a Los Angeles director.

Carl Kymla, a representative of the Municipal Water District of Orange County, said he will convene a meeting of the special budget committee to explore alternative revenue sources or budget cuts to make up for the loss of $25 million in availability charges.

Under the parcel charge, landowners will be assessed $5 a year per parcel. Parcels of more than one acre will be charged $5 per acre. The Los Angeles Department of Water and Power and the city of Santa Monica have said they will absorb the parcel charge for their customers.

The service availability charge would have been assessed on the MWD’s 27 member agencies, based on their water purchases over the last four years.

Both charges took effect July 1, but no money has yet been collected.

On Tuesday, the MWD board also approved a 3.5% wage increase for management personnel. One month earlier, the board rejected a proposed 6% raise.

The increase does not apply to the three most senior executives and their assistants, who will receive no raises this year.