EG SEWER FEE INCREASE – CORRECTLY OR QUICKLY?

The East Greenbush Town Board has scheduled a

• Sewer Fee Increase Public Hearing for 6:00 PM on Thursday, April 28^th and 
• Special Meeting at 7:00 PM on Thursday, April 28^th to increase them.   

Why the rush?  The 2016 payment is covered by Sewer fund balances.  Isn’t correctly addressing the issue(s) better than quickly addressing them?

The Sewer Fee Increase Plan uses $1.6 million in fund balances over the next four years to mitigate those same fee increases. 

I’ve presented a plan to use $700,000 in fund balances to pay the 2017 WWTP debt service (leaving fund balances totaling $2.5 million) and fix the structural problems of the Sewer District Budgets.  ‘Buying’ this extra year gives the Town Board the time to: 

(1)   Learn whether the $1.6 million State grant application for the WWTP Upgrade is approved, possibly decreasing the EFC WWTP borrowing to $14.0 million;

(2)   Convert the General Sewer District to an Assessed Value tax basis, shifting some of the tax burden from residents to businesses and conforming the General district to the other districts;

(3)   Reapportion Operations & Maintenance (Personal Service/Contractual Expenses/Employee Benefits) costs, including the Rensselaer County Water & Sewer Authority service agreement payments, among districts based on consumption;

(4)   Restructure taxes to pay debt service, capital improvements and the RCWSA service agreement and fees and other revenues to pay O&M;

(5)   Investigate retiring existing Bond Anticipation Notes with fund balances;

(6)   Pursue refinancing existing Bonds and the RCWSA service agreement; and

(7)   Consider using remaining fund balances to phase in (3) and (4) above.

The WWTP debt service has been looming unaddressed for years.  I’m advocating resolving a number of issues in addition to the ‘immediate’ one.  Some Town Board Members agree with some of my proposals.  I’m saying to do them all before raising fees in haste.

Pete Stenson

Flush the East Greenbush Sewer Fee Increase!

The 4/13/16 East Greenbush Sewer Fee Increase Public Hearing (4/13/16) drew a full house, with supporters outnumbering opposition.  I opposed.

 

Councilperson Matters appears to be the only Board Member opposing the Sewer Fee Increase proposal.  Good for you, Mary Ann!  

The proposal would pay the $700,000 WWTP debt payment, which begins in 2017, using fund balances ($400,000/year) and fee increases (worth $300,000/year) over the next four years. 

I see the opportunity to resolve many Sewer District issues and I’ve provided the Town Board with a strategic plan which:

• Converts the General Sewer District to an Assessed-Value tax basis;
• Replaces the four $400,000/year annual WWTP debt payment fund balance usage ($1,600,000) with one or more hits totaling $700,000;
• Shifts funding of the $400,000+ in annual payments to the Rensselaer County Water and Sewer Authority from fees to taxes; and
• Supports debt and capital improvements with taxes and day-to-day Sewer District Operations& Maintenance
   
  with fees.

I also proposed investigating the allocation of the RCWSA payments and Sewer O&M, ensuring equity among the Districts.

The end result isn’t pretty, with combined Sewer tax and fee increases of General +35.5%; Hampton Manor +27.1%; Couse +31.8%; Third Avenue +18.0%.  But Sewer District funding would be correct and defensible, with fund balances remaining $900,000 larger.  These increases could be implemented over 1, 2 or 3 years, per the Town Board’s preference.

There will be another Public Hearing on 4/28/16. Tell the Town Board to Flush the Sewer Fee Increase and do this right the first time! 

Otherwise, the Sewer Fee Increases will be approved, the Town will continue raiding $400,000/year in fund balances and everything will be right in East Greenbush.  Until those fund balances run out!  Then what, folks??

Pete Stenson
East Greenbush

EAST GREENBUSH SEWER RATE PUBLIC HEARING

EAST GREENBUSH SEWER RATE PUBLIC HEARING

The East Greenbush Town Board is holding a Public Hearing concerning proposed Sewer Rate Increases at 7:00 PM on April 13, 2016.  The increases are deemed necessary to pay the annual debt service for the Waste Water Treatment Plant.
  

Supervisor Conway and Councilperson Tierney analyzed the current usage and fee structure and developed a proposal that would increase fees (the long-dormant Citizens Fiscal Advisory Committee has not reviewed the proposal).  The new fees for residential minimum users:

Couse and Third Avenue: $121.50 (+$31.50 or 35%);

General: $84.50 (+$34.50 or 69%);
Hampton Manor: $156.00 (+$52.00 or 50.0%)

One stated goal was to develop equitable billing; however, the historic bias favoring General is continued (General accounts for 52% of the 2013–15 Average Usage but only 40% of 2013–15 Average Revenue).  Absent a cost accountant's analysis, there is no defensible reason for this bias. 

Facing an unavoidable tax increase or fee increase, I‘ve long expressed my preference for a tax increase.  The rationale is straightforward.  Taxes:

(1)   Should support debt and capital improvements with fees supporting operations and maintenance.

 

(2)   Are guaranteed – the Town is 'held harmless' by the County if one’s taxes aren’t paid.  Unpaid fees are added to the next year's taxes and not available when needed.  Fee increases also yield lower usage, requiring further increases.  

 

(3)   Are paid in January, while fees are billed quarterly or semi-annually and may not be available when the debt service is due.

 

(4)   Are deductible by homeowners itemizing deductions on their Federal and State tax returns and thus subsidized, while user fees are not. 

I respectfully suggest that the Town Board defer action, have CFAC study the Sewer and Water tax and rate structures and make all truly equitable.

Pete Stenson

East Greenbush

EG Water and Sewer Districts

The recently disclosed Waste Water Treatment Plant cost increases, bond cap increase, tabling of CP Matters' reso for Delaware Engineering to study the Sewer Districts and Fee-rate Structures, Board Member comments to the media, presentation of the Conway-Tierney Sewer Rate Analysis and Fee Increase Proposal http://eastgreenbush.org/news/925-sewer-district-analysis-2016 , and finally the scheduling of a Public Hearing on the Sewer Rate increases for 7:00 PM on April 13, 2016 inspires publication of Pete Stenson's EG Water and Sewer Districts series as published in the Advertiser. 

 

EG Water and Sewer Districts: PART 1 - TAXES

Councilperson Mary Ann Matters has twice unsuccessfully introduced Resolutions (36-2015 and 54-2015) to retain Delaware Engineering to Analyze and Evaluate the Town’s Sewer Districts and Fee-Rate Structures and to Recommend Changes Thereto. 

 

Supervisor Keith Langley referred the issue to the Citizens Fiscal Advisory Committee which determined that its members didn’t have the requisite knowledge.

I’ll share my analyses in a series of letters, based on 32+ years of budgeting experience.

The General Water and General Sewer Districts (GW&GSD) levy taxes based on Units (pipe footage) rather than Assessed Value (AV) which is used by the other Water and Sewer Districts.

The Unit-based approach has some businesses paying lower taxes than residents, e.g., Dunkin Donuts on Columbia Turnpike pays $249 on 89.16 Units, while I pay $308 on 110 Units.  An AV-based tax using our respective $644,300 and $217,600 AVs would have Dunkin Donuts pay $792 (+$543) and me $267 (-$41). 

Some taxpayers would pay more using AV, others less, depending on their property’s Units and AV.  To estimate your impact, multiply Units from your tax bill (http://egov.basny.com/EastGreenbush/) by 2,270.  Results higher than AV means lower taxes, results lower than AV means higher taxes, e.g., my 110 Units x 2,270 = 249,700. 

 

Changing to AV would appropriately and equitably reflect future residence and business additions and Town-wide reassessments, place all taxing jurisdictions on the same AV-based approach and allow Operating and Maintenance costs to be allocated among the Districts by Total District AV. 

Ditto the ‘dreaded’ $600,000 in payments for the Waste Water Treatment Plant Upgrade debt, which would require about $0.44 more per $1,000 of AV ($88 on a $200,000 AV).  This is offset for some taxpayers by GW&GSD decreases due to changing to AV.  For example, my $217,600 AV would yield a net cost of about $55/year ($96 – $41 saved by changing to AV estimated above). 

Remember, taxes are deductible on Federal and State Tax Returns for those who itemize deductions.

Many thanks to Town Assessor Judy Goodyer for her speedy FOIL replies!

EG Water and Sewer Districts: PART 2 – FEES

As promised, following is my conceptual analysis of the Town’s Water and Sewer Districts Fees, but first my caveat that Taxes should support debt and capital improvements while Fees should support operating and maintenance (O&M) costs.  Water and Sewer fees number more than 100. I’ll not attempt to describe, let alone explain, them.

The 2015 Adopted Water (General and Hampton Manor) and Sewer (General, Hampton Manor, Couse and Third Ave.) District Budgets include $550,275 in Debt Service and $890,588 in service payments to the Rensselaer County Water and Sewer Authority for debt issued by that Authority for East Greenbush, for a total of $1,440,863.

These Budgets also include $1,663,734 in Property Taxes, $3,149,313 in Fees and $485,933 in Other Revenues.  My caveat reduces the combined tax levies by $222,871 to $1,440,863 (-13.4%), helping offset the impact of the $600,000 in 2017 WWTP Upgrade debt service mentioned in Part 1 – Taxes.

This tax cut increases fees by $222,871 to $3,420,015 (+6.5%); however, the higher volume Water and Sewer users would appropriately pay higher user fees.  Water consumption is somewhat elastic in that demand (usage) decreases as prices increases - shorter showers, fuller clothes/dish washer loads, fewer car washings, fewer lawn/garden waterings, etc.

My estimates of the resulting Tax and Fee changes, excluding allocating O&M and WWTP Upgrade debt service costs across the Districts:

• General Water: Tax +$82,610 (+18.7%) Fees -$82,610 (-4.3%)
• Hampton Manor Water: No Change
• General Sewer: Tax -$203,619 (-44.8%) Fees +$203,619 (44.4%)
• Hampton Manor Sewer: Tax -$139,207 (-53.4%) Fees +$139,207 (145.5%)
• Couse Sewer: Tax -$32,758 (-23.5%) Fees +$32,758 (+21.4%)
• Third Avenue: Tax +$70,103 (+19.1%) Fees -$70,103 (-18.6%)

I’ve not converted these Tax and Fee changes to rates per $1,000 AV or rates per 1,000 gallons or cubic feet of usage.  Suffice it to say that it can be done.

Many thanks to the Water and Sewer Departments’ Stacy Crain and Amy Binck, without whose help my analyses would not have been possible.

 

EG Water and Sewer Districts: PART 3 – SUMMARY AND SELL THE WWTP?

Summary

Part 1 – Taxes discussed changing the General Water and General Sewer Districts’ tax levy basis from Units (pipe footage) to Assessed Value (AV), which would appropriately and equitably reflect future residence and business additions and Town-wide reassessments, place all taxing jurisdictions on the same AV-based approach and allow Operating and Maintenance costs to be allocated among the Districts by Total District AV.   Part 1 also estimated the cost of the Waste Water Treatment Plant Upgrade to be about $0.44 per $1,000 of AV.

Part 2 – Fees discussed using Taxes to support debt and capital improvements and Fees to support O&M costs, transferring $222,871 in revenue from Water and Sewer District tax levies to usage fees, with higher volume Water and Sewer users appropriately paying more in fees.  These tax cuts further offset the impact of the $600,000 in WWTP Upgrade debt payments if funded via taxes.

Sell the WWTP?

Former North Greenbush Supervisor Jim Flanigan asked “Why do you have a Treatment Plant?” at the 4/29/15 Fiscal Responsibilities of Elected Officials Forum and suggested selling it to the Rensselaer County Sewer District (RCSD), which raised rates 17.5% in January). 

EG’s current minimum quarterly sewer charge is $12.50 for General and Hampton Manor (Metered) customers and $22.50 for Third Ave and Couse customers for up to 10,500 gallons (a 12/17/14 proposal to raise Sewer rates failed).  RCSD’s minimum charge is $46.40 per quarter ($33.90 and $23.90 more respectively) for up to 13,875 gallons. 

During the 8/1/14-1/31/15 period 3,728 of the 10,700 EG sewer bills issued (35%) were for the minimum charge.  These customers would have paid about $113,000 more with RCSD!  Double that and we’re talking $226,000 for the full year! 

Folks, that’s 37.6% of the WWTP’s $600,000 debt service payment!  AND we’d still have to support debt service and O&M costs on the non-WWTP infrastructure! AND we’d have many future RCSD rate increases to look forward to, while the WWTP’s $600,000 debt service won’t change!

Sell the WWTP to RCSD?  NO THANKS!

Pete Stenson
East Greenbush