Independent Guestatorial: A taxing dilemma

Our water and sewer infrastructure continues to deteriorate. Utilities and operating expenses at the treatment plant are skyrocketing. Since 2013, over $800,000 from the General Fund has been needed to shore up the water and sewer departments.

The city contends that an additional 1% sales tax is the answer. I disagree and believe that other steps must be taken first.

The water and sewer departments are enterprise funds and are supposed to be self-sufficient. Like gas and electricity, water and sewer services are consumption driven. The more you use, the more you pay. If over $800,000 had to be transferred in over just 3-1/2 years, something is wrong.

After studying the water and sewer budgets from 2009 to today, my suspicions were confirmed: While we are in dire straits, it’s a condition that could have been, and should have been, addressed long before now.

State law (ACA 14-235-223) provides that the council shall establish and maintain rates, sufficient in each year, for the payment of the expenses of operation, repair, replacements, and maintenance of the sewer system. Likewise, water rates (ACA 14-234-214) must be adequate for operating expenses. Debt service and a depreciation fund are included, as well.

In addition to state law, we agreed, when issuing water and sewer bonds, to maintain rates to accomplish the same purposes.

I do not believe that has been done and offer these observations from the financials:

1. Water rates consistently have been higher than needed to cover water department operating expenses. That excess revenue, until 2013, was what kept the combined water/sewer departments in the black. In 2013, transfers from the General Fund started.
2. Procedurally, council can raise water rates without holding a public hearing. Since 2002, our water rates have gone up six times.
3. Revenue from sewer fees in 2015 was 3% lower than in 2009. In fact, sewer fees in every year since 2009 were lower than in 2009. On the other hand, operating expenses for the sewer department rose 38%. Factor in the annual debt service payments and the disparity between revenue, and expenses is even larger.
4. To raise sewer rates, council must first hold a public hearing. Though expenses have risen and revenue has remained relatively flat, there has been only one sewer rate adjustment since 2002, and that was in 2008.
5. For a long time the city has paid for more water than it was able to bill. In 2015, for example, for every 100 gallons the city bought from Carroll Boone, the city billed only 47%. Presumably, the rest was lost to leaky pipes and defective meters.
6. In June 2014, council appropriated $477,000 to replace all water meters believing that the city would experience a revenue boost. As of today, most meters have been replaced.
7. For the first 8 months of 2016, the city billed for over 5% more water than during same period in 2015; but the number of gallons we bought also increased, by nearly 17%.

Before we consider a tax increase, water and sewer rates must be addressed and brought into line with operating and maintenance expenses. This has been ignored for so long that it will be a challenge. But an increase in sewer rates to properly reflect the costs of treating it would place the burden on the users, as it should be. The more you use, the more you pay. A tax on things like groceries, building materials, dining out, utility bills, gifts and souvenirs unfairly shifts the costs of our water and sewer systems.

I agree with the primary objective of this tax but I reject the City’s approach and I will vote NO on November 8.