Elkton Should Double Planned Increase in Sewer Rates & Seek 29%; 59% Increase in Water Holds

Elkton Town Hall, July 14, 2010 – Once again the Mayor and Commissioners met with consultants hired to recommend adequate water and sewer rates for the next four years.  Ed Donahue and Tracey Smith representing the Municipal & Financial Services Group returned to this workshop with revised rates, which came about after Elkton recently discovered it was facing a shortfall in the major facilities fund.  That deficit arises because construction isn’t taking place and the town had waived the collection of revenue.  This loss of cash hadn’t been anticipated in the January 2010 presentation.

Before the board heard the news about  the shortfall realted to utility hook-ups, it took a straw vote to increase Elkton water rates by 59% and sewer rates by 12% over four-years.  But the last-minute finding tossed everything back into the hands of financial experts as updated rates were needed to help the town determine how it was going to make up the revenue.

The second time around the consultants recommended Elkton increase water revenues 59% over four years, which is what they’d called for earlier.  This pricing point didn’t change since the water account doesn’t have any capital debts that need servicing and they’d already figured out the substantial operating increases.

But sewer rate was a different matter.  The recommendation is for an increase that’s more than doubles what was anticipated a few months ago.  Over four years, the rate-setting experts said the town should collect 29% in additional revenue, while earlier they’d said a 12% increase would maintain sufficient revenue.  The sewer fund has a large capital debt load, which has to be reduced.

The consultants also recommended Elkton establish a reserve fund for routine repair, replacement and rehabilitation of the system since they have aging infrastructure and there is currently no reserve for this type of upkeep. 

These are the considerations that are on the table for the town board.  The rates average out over four years and the report contains a number of alternative schedules that provide options for  shifting costs around based on consumption patterns and other public policy considerations.  But as the specialist reminded the political leaders these are real costs.  They have options, but the costs are real and must be recovered.  If they shift pricing points from one group, they have to add it to some other rate-payer.

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3 responses to “Elkton Should Double Planned Increase in Sewer Rates & Seek 29%; 59% Increase in Water Holds

  1. Puzzled in Elkton

    What is up with this. How come they had to come back so soon and get more money. Sure would think they would have known in January is they needed another half million bucks.

  2. Puzzled in Elkton
    That’s an interesting question. You would think they would’ve know that the major hook-up fund wasn’t getting the revenue it needed since new buildings weren’t being erected in Elkton.

    The other thing is that they’d waived a lot of fees. We suspect it approaches a million dollars in all the fees the town should collect. Whenever it came up, it would cause discussions at the board meetings about how they were going to make up the revenue, but the majority of the board would go ahead and approve it.

    Still you’d think they would’ve know this in January so it could’ve been included in the study at that time, rather than wait until June to find it out.

  3. And you really think they didn’t know in January? Hate to bring up sour grapes but there was an election in the middle of this. At a workshop in April they agreed to put it off till after the election. It is record.

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