County Council supports 6% water, sewer rate increase for WSSC

County Council supports 6% water, sewer rate increase for WSSC

Utility, county executive had proposed greater hike

| Published:

The Montgomery County Council supported a 6% increase for water and sewer rates at its Thursday meeting. The proposed rate increase was 7%.

File photo

Montgomery County Council members voiced their support on Thursday for a 6% increase in water and sewer rates for the coming year through the Washington Suburban Sanitary Commission.

During an online meeting, several council members said they were hesitant to recommend a rate increase while the public health crisis continues.

Both WSSC, which also serves Prince George’s County, and County Executive Marc Elrich proposed a rate increase of 7%. The next fiscal year starts on July 1.

When asked whether the commission could work with a 5% rate increase instead, WSSC CFO Patricia Colihan said it would put the commission in a “dire” fiscal situation and cause the utility to only have 34 days of cash on hand.

“That’s just not an acceptable place for a utility of our size with a budget of 1.5 billion total dollars and $800 million worth of operating expenses,” she told the council. “It’s just a really difficult place to be. … We did that projection and it was really not a sustainable picture, and in future years, would be even worse.”

Council Vice President Tom Hucker told WSSC that while he understood its financial situation, he was worried about a rate increase.

“At this point, I’ll share that I remain concerned about the significant increases in WSSC rates year after year without an end in sight,” he said. “I don’t feel like this process, particularly without being able to consider these in a committee setting, really sets us up to do the best work for our constituents and rate-payers.”

Hucker said he felt that there was a lack of “imagination and innovation” in coming up with ways to find money elsewhere.

“I’m very concerned about what we’re going to see during a looming, historical economic recession that we’re entering,” he said.

Colihan said the commission is evaluating ways to enhance its affordability programs for residents.

“We are very concerned about customers that will be struggling [with a rate increase],” she told the council, adding that the commission is focusing on its customer affordability programs and helping vulnerable residents who need assistance. But the rate increase is necessary, she said.

“That deferred investment just builds upon our maintenance costs and becomes more expensive in the out -years,” she said of lower rates.

The commission has $1.8 million budgeted for its affordability programs, in which customers can get help if they have trouble paying.

“If more customers need more assistance, we have to build that in and find more in reserves or in other ways to meet that need,” Colihan said.

Council Member Will Jawando said he was glad the commission was focusing on its affordability programs, but the figure seemed too low.

WSSC’s revenue collections are down by 9% since March 16 compared to the same time period in 2019. In April, the revenue loss was 10%.

Both accounts and amounts for bills that are past due are up by 10% each. The due amounts for the past 50 days total $3.6 million, Colihan said.

Since mid-March, commercial usage, which accounts for 40% of the commission’s revenues, has decreased 16% and government usage has gone down 19%. Residential usage, which is only based on remote automatic meter readings, is down 0.4%.

Colihan said the commission is expecting to see revenues decline $147 million combined this fiscal year and the next , which begins July 1. The loss is equal to a 22.6% rate decrease, she said.

Colihan said the 7% rate increase is needed to keep projects on schedule, issue bonds to finance construction, maintain adequate reserves, and prevent longer-term cuts to services. Even with that rate increase, reserves will be reduced by $56 million and the number of days with reserves on hand would be 40 days compared to the standard of 60 to 90 days, she said.

To save money, WSSC has taken several steps, including expanding a hiring freeze and implementing a savings plan of more than $61 million for the current fiscal year.

The $856.2 million budget proposed by WSSC and Elrich — a 4.7%, or $38.8 million, increase from this fiscal year — factors in proposed employee raises of $5.7 million.

The council staff recommended a budget of $850.5 million that did not include potential employee raises since those will be discussed by the council later.

The council took a unanimous straw vote, which is not an official vote, on decreasing the rate increase from 7% to 6%, which would provide a budget of $849.7 million. The council’s recommendation is $6.5 million less than the proposed budget.

The commission’s combined water and sewer rates are between $11.89 and $20.26 per 1,000 gallons, depending on daily use.

Keith Levchenko, a senior legislative analyst for the council, wrote in an email to Bethesda Beat on Friday that WSSC could get close to achieving the lower budget if the employee raises are not granted. Taking out the raises would bring the rate increase down to 6.2%, which means they would need to find additional savings to additionally decrease it to 6%.

Council Member Nancy Navarro said at the meeting that supporting an increase bothered her.
“There’s going to need to be more creative ways of finding that assistance and the number one priority should be everybody should have access to this essential element,” she said.

Hucker said it seemed that the commission wanted a rate increase because it didn’t want to dip into its reserves.

Colihan said the commission is using its reserves and wants to have a sufficient amount. With a 7% rate increase, it would have 40 days of reserves.

“We’re concerned that those reserves will dip so low that we won’t have them when we might need them again and the only way to build them up is through rates,” she said.

Hucker said the council didn’t want to be in a position of increasing rates and cutting budgets.

“It would be sort of tone deaf to just move forward without changes [to the budget] with a rate increase that was recommended pre-COVID, when we’re expecting to go trim all our departments despite all the unmet needs that existed in Montgomery County that existed before this,” he said.

Briana Adhikusuma can be reached at briana.adhikusuma@bethesdamagazine.com.

Back to Bethesda Beat >>

Leading Professionals »

Newsletters

* indicates required

Dining Guide