Sewer Rates to Increase 20%; Public Hearing Set for Nov. 16
In a memo to the Board of Selectmen, Town Administrator Denis Fraine and Chief Financial Officer Chris Laviolette, DPW Director Donald F. DiMartino explained the following:
Billing for sewer is below the projections made when the budgets were submitted last winter. This has led to a concern regarding whether we will have sufficient funds in sewer enterprise to cover the annual budget. The water revenue is also down, but we have a cushion due to the elimination of water debt costs from the annual expense budget.
The sewer expense budget was hit with expected significant increases this year, entirely due to the passed down debt costs from the City of Woonsocket and Charles River Pollution Control District. Both of our receiving treatment plants have undertaken major capital improvements to update the facilities and comply with new strict nutrient discharge limits.
The FY2016 approved sewer budget is $1,300,481 which is an increase of $240,000. Billing has been well below projections for the first three months of FY2016. The CFO now needs to show DOR more realistic numbers regarding how we will pay our annual sewer costs before we can set the tax rate. I had hoped to defer sewer rate increases until FY2017 rate review discussion, but we cannot.
Therefore, I am suggesting a 20% rate increase on the service fee and consumption billing rate to be effective January 1st. This should generate $130,000 of revenue in FY2016. To make up the remaining potential short fall, two sewer capital projects will be put on hold. This will allow us to transfer funds at the May 2016 town meeting to augment revenue.
“Unfortunately, this is not the end of sewer rate increases,” DiMartino explained. “We have not hit the full brunt of the sewer plant construction debt costs. The projects are under construction and CRPCD is already warning of a cost overrun. Future increases will not be as dramatic, but we will not be completely out of the woods regarding debt cost increases until FY 2018. Once the construction is completed and long term borrowing is in place, we will have debt principal and interest costs, which are scheduled to stay steady for the 20 years of loan payback.”
The most recent Tighe & Bond, Inc. Water and Sewer Rate Report indicates the statewide average cost for a sewer customer that uses 90,000 gallons a year is $830/year. Currently, a Bellingham sewer customer that consumes 90,000 gallons is paying $835/year. This will go up to $1,002.50/year with the proposed increase. “Our sewer rates are high due to our small customer base [1,740 or 28% of water customers,” DiMartino concluded.