Part of the Budget process each year is determining the rates that are seen on the water bill. The City has a July to June fiscal year, and typically the vote to approve the Budget and set the water bill rates is done at the second meeting in June. Having the vote at the last City Council meeting before the new year gives us the most amount of time to plan, estimate dollars coming into the City, and get everything into the Budget that we would like to see.
Last year, as usual, the City Administration (City Manager, Finance Director, etc.) proposed new rates for the water bill. Typically these rates increase by a few percent each year due to inflation or some increased costs with our water or sewer providers. These proposed rates were instead a 30%+ average increase to the typical resident's water bill. In many cases it was even higher, surpassing 36%, depending on the size of the Ready-to-Serve pipe and how many units of water were used that month. Obviously, this proposed increase immediately troubled me. Were we really under-charging for years (a suggestion from the Finance Director)? Was there some increase from the Great Lakes Water Authority (GLWA) or Southeast Macomb Sanitary District (SMSD) that I had not heard about? Well, I began investigating, and well, setting water and sewer rates is complicated.
First, I made a spreadsheet (excerpt below) of what the new rates would look like compared to the current rates. This is how I determined the increase was over 30% for most, if not all, households. I provided the City Council with this spreadsheet prior to our vote last year. Everyone on Council voted in favor of the 30%+ water and sewer rates, other than myself.
This year I did more research because I assumed we would not get a proposal from City Administration drastically reducing rates. This time I compared our rates to nearby cities (excerpt below) that also use the GLWA, comparing bills apples-to-apples as best as possible since each City has a unique way of billing water and sewer. Included are as many Macomb County cities as possible, with a few others also included. Items such as garbage, recycling, and our Sewer Line Assistance Program (SLAP) are not considered in the comparison.
Since it did not appear there were the votes on Council to reduce rates, I was looking for other options. But before getting to the option the City Council voted for, I want to explain that I did believe that water and sewer rates had to increase last year, but nowhere near the 30% rates that were proposed. And since it is complicated to come up with rates, I did not know exactly what rates to propose this year. This is when our new Interim City Manager Ryan Cotton came in. He suggested to me and the rest of Council that we have a professional third-party study done. This is not something that a City would need to do every year, but he suggested it since there was not consensus on the City Council. What I therefore suggested, and was subsequently passed, was a Budget with $10,000 set aside for a professional study. I stated that I would stand by the results of this third-party, professional study. They will look at water rates from GLWA, sewer rates from SMSD, capital needs, and any other pertinent information. Originally a 2.8% increase in the water rate and 3.2% increase in the sewer rate was proposed by City Administration for this upcoming fiscal year on top of the 30%+ rates last year. Then, the City Council voted to rescind the Water Shut-Off policy (which I voted against and hope to outline in another post on my website), which our Finance Director said could reduce the increase in water and sewer rates to 1% since this policy creates overhead in finance and the DPW and is not covered fully by the water shut-off fee. What I then suggested (and wasa passed) was that we keep water and sewer rates the same as last year until this study is done. We will be conducting the study during this fiscal year and most likely adjusting the water and sewer rates shortly after the study is concluded.
Another factor contributing to my opinion that water and sewer rates were too high is that we heavily increased infrastructure spending for fiscal years 2013-2016, compared to fiscal years 2007-2012. Water and sewer infrastructure investment is definitely needed, but we also need to wisely invest in it, and also carefully, so that we are not making water bills unaffordable. A relatively small reduction in capital spending for 2013-2016 would have kept water bill rates at a reasonable level, increasing only a few percent a year, and the City still would have been invetsing more in our infrastructure than compared to fiscal years 2007-2012.
And for reference, this is a link to my personal water bill.