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.