BOISE, Idaho – The city of Pocatello could be forced to pay back millions of dollars in excess fees following a recent Idaho Supreme Court ruling.
According to the unanimous opinion, justices ruled that Pocatello’s sewer and water fees were not set at reasonable rates to help cover the costs of providing government services. Instead, the court found that the city had illegally spiked the fees to help boost the general fund.
“The city made the decision that its water and sewer departments should be operated as for-profit corporations in order to raise revenues for the city’s general fund,” wrote retiring Justice Daniel Eismann in Wednesday’s ruling. “The 10 percent increase in monthly bills means that the city was earning a profit of 10 percent above the amount that was necessary to ensure that its water and sewer systems would always remain self-supporting.”
The city’s excessive sewer and water fees were first invalidated by a lower court in 2013 after the Building Contractors Association sued the city for implementing the higher fees. However, a separate party filed a new lawsuit in 2014 demanding a refund for being charged the illegal fee.
That lawsuit was then dismissed in district court. However, on Wednesday, justices remanded the lower court’s ruling. They argued the judge was wrong in deciding the city did not have to pay back the illegal fees.
Eismann also cited a 2006 letter from former Pocatello Mayor Roger Chase to the state attorney general’s office claiming that fees are a fairer way to boost revenue for the city rather than increasing taxes. A deputy attorney general responded that doing so was inappropriate.
“The city is aware of the decision and staff is reviewing the ruling as well as any implications for the city. At this time, the city does not have a comment on the pending litigation,” said Pocatello spokesman Logan McDougall.
The lawsuit now goes back to the district court for proceedings consistent with the high court’s decision – which could result in the city forking over the revenue it collected illegally from the fees.
In the ruling, Eismann said the city collected $4 million in profits from the excess fees between 2006 and 2012.