April 21, 2007

TO THE MISSISSIPPI STATE SENATE

GOVERNOR'S VETO MESSAGE FOR SENATE BILL 2962

I am returning Senate Bill 2962: "AN ACT TO AMEND SECTION 19-5-151, MISSISSIPPI CODE OF 1972,TO CLARIFY THE INCORPORATION OF RURAL WATER ASSOCIATIONS INTO WATER DISTRICT; TO PROVIDE THAT THE PUBLIC SERVICE COMMISSION SHALL REVIEW CERTAIN DISPUTES BETWEEN CUSTOMERS AND CERTAIN WATER DISTRICTS WITHIN THE THREE COASTAL COUNTIES AFFECTED BY HURRICANE KATRINA; TO PROVIDE FOR THE REPEAL OF SUCH REVIEW; AND FOR RELATED PURPOSES," without my approval and assign the following reasons for my veto.

After full consideration, I am vetoing Senate Bill 2962, which establishes a new and inappropriate role for the Mississippi Public Service Commission (PSC) with regard to local water districts. Senate Bill 2962 grants a state entity, the PSC, the authority to set the rates, charges or fees for the Diamondhead Water and Sewer District. While it is appropriate for the public to have a voice in the rate-setting process, and for the public to have the right to appeal those rates, it is not appropriate to cede local control to the PSC for only certain water districts.

Senate Bill 2962 would establish new appeals and rate-setting processes for only one entity in our state, the Diamondhead Water and Sewer District. Every other water supply district, and the citizens who are serviced by every other water supply district, would continue to operate under different rules. Establishing a new role for the PSC as proposed under this legislation would open the door to statewide regulation of water and sewer rate structures. However, those decisions are best left to local governments since they in are the best position to know their service and financing needs. For example, the PSC may determine that Diamondhead's homeowner rates are too low and need to be dramatically increased to subsidize lower commercial rates. Such a decision is best left to local government. While rates differ among districts, current state law mandates local water districts to prescribe and collect reasonable rates. Since local water districts do not have taxing authority, the only source of revenue to provide service, pay debt, and finance operations, expansion, and/or reconstruction is user rates.

Furthermore, since the PSC does not currently regulate the rates of any incorporated water district, municipal water district or rural water association, they do not have the resources or the expertise to meet the mandates of Senate Bill 2962.

I appreciate the goals of the Diamondhead Water and Sewer District customers who seek a fair hearing regarding their local rate structures. I understand the District is taking steps to address these concerns by creating a new public hearing process and by setting a maximum for commercial tap fees. This new approach should be given the opportunity to work. If this is not satisfactory to the District's customers, state law already provides a review process through the judicial system. All of these are better solutions to this problem than Senate Bill 2962.

For these reasons, I urge the members to reject Senate Bill 2962 and sustain the veto.

Respectfully submitted,

Haley Barbour,

GOVERNOR