Former internal auditor claims San Diego diverted ratepayer funds charging an illegal tax

Source: Former utilities department leader says city diverted ratepayer funds to unrelated services

The claim’s accusations of illegal activity center around a provision in California law that limits the rates that can be charged for governmental services.

The provision generally limits those rates to an amount “which does not exceed the reasonable cost to the local government of providing the service or product,” according to the state Constitution. Water and wastewater rates must reflect the actual cost of providing such services and funds intended for utility services cannot be used to finance unrelated city offerings.

“In other words, the city may not create a hidden tax by using funds paid by water and wastewater ratepayers (known as Enterprise Funds) to subsidize deficits in its general fund,” the claim said, adding that the city has a history of such unlawful activity.

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