WHILE THE SAN Francisco Board of Supervisors is struggling to save popular programs from the budget axe, and some progressives are scrambling for ways to make sure the wealthy pay their fair share of the city's revenue burden, there's a big chunk of money out there that nobody's looking at: water and sewer fees.

We're not talking about massive rate hikes for small residential users (although water rates almost certainly have to go up). There's a much better source of cash.

San Francisco is one of the few cities in California that doesn't impose a connection fee for new commercial and residential projects – in essence, a charge for linking a building up to the water and sewer system. It's an excellent idea the supervisors ought to push for immediately.

In fast-growing areas, water connection fees are a source of significant revenue. The fees, often as much as several thousand dollars per connection, are easily justified: when rural areas are turned into dense residential subdivisions, with thousands of new houses, the cost of extending public water and sewer lines to the area is high. Besides, some argue stiff connection charges discourage sprawl – which is also a good thing.

In San Francisco, as Matthew Hirsch reports on page 13, city Public Utilities Commission officials – demonstrating once again their subservience to powerful private interests – say there's no need for a connection fee, since the system of water pipes and sewers is already built out to every possible site. But connection charges should cover more than just the price of new pipes: every new office building or big residential complex adds to the capacity burden on a system that's old, crumbling, and desperately strapped for cash. Two thousand new workers in a high-rise, or 500 new residents in a condominium tower, means a lot more showers and sinks and faucets drawing water, and a lot of toilets flushing waste into a sewer system that still dumps untreated effluent into the bay every time it's overwhelmed by storm water. And state law allows the city to charge connection fees even if it can't prove the money is needed to expand capacity. A PUC consultant, Black and Veatch, recommended last year that the city begin charging $1,012 per new connection; that's probably too low, considering the average in the state is more than $2,000.

If it's set up properly, this could be a fair and progressive new tax. It would be easy, for example, to exempt nonprofit affordable-housing projects, or to give a waiver to for-profit builders who construct more than the statutory minimum number of affordable units in their projects. The fee for large commercial projects (and hotels) could be set much higher than the rate for small residential projects. This could also be a way to collect some money from the tax-exempt developers and institutions at the Presidio.

That money could be used not only to cover the cost of repairing and upgrading the local system but also to help hold down the sort of across-the-board water-rate hikes everyone with any sense agrees are probably needed to keep the system afloat. If the fees are increased, though – and the PUC is recommending 11 percent a year for each of the next three years – the assessment structure needs to change: currently, the "lifeline" rate, a reduced fee for modest usage, applies to everyone, from Tenderloin tenants to the owners of mansions in Sea Cliff. That's foolish. Millionaires in giant homes should pay a higher fee on every gallon than low-income tenants in small apartments.

The annual revenue from a fair water and sewer connection fee could run well into the millions. It's money that's just sitting there, waiting for the city to collect it. And revamping the rate structure could make a regressive fee far more fair. The supervisors need to demand those changes.

P.S.: Susan Leal, the presumptive new PUC general manager, needs to make her position on this clear: Will she continue to side with the rich, as she's done for most of her political career, or will she advocate for a more fair fee structure? And will she openly, aggressively advocate for public power (and all the hundreds of millions of dollars in revenue it'll bring in)? PPS: Where's the city controller's report on the costs to the local economy of Pacific Gas and Electric Co.'s high rates? Perhaps Leal – who has always been an ally of PG&E – can ask Controller Ed Harrington to hurry up and finish it. The city's broke, and PG&E's illegal monopoly continues to cost us a fortune. If Leal won't address that issue, she doesn't belong on the job.