The CSD Board called an emergency meeting on May 28 following a budget impasse at the its regular meeting May 20. Directors at the earlier meeting were divided on a list of six possible operating and capital improvements budgets for 2009-13.
The May 28 meeting was held in order to make a timely decision on the 2009/10 budget. Proposition 218 stipulates that a rate increase of more than 3.1 percent requires a public hearing 45 days in advance – in the case of the CSD, set for July 15.
Without the increase, town coffers would have experienced a shortfall in the coming fiscal year of approximately $145,000 due to ongoing projects and proposed improvements. Some of the proposed budget plans called for as much as 8- to 9-percent increases, but the agreed-to 3.1 percent hike – an average of about $1.40 per month for residential users – will allow the district to remain in the black. If the additional dollars are not spent, the money becomes reserves.
Vice President Mark Simon, who chaired the emergency meeting in place of an absent President Ray Tetreault, wasn’t initially convinced an increase was the answer, especially given the town’s $3 million in reserves.
“This town is not broken,” said Simon. “To me, what I’m wrestling with is that I’m looking at a cost of living that has gone down and we are telling people we need a rate increase when the cost of living has gone down? At this point I don’t feel the least bit comfortable that we need a rate increase.”
However, some directors believe adding extra padding might not be a bad idea. The district faces the threat of fines from the state for salinity, copper and tertiary pharmaceuticals in its water supply, and has yet to settle with former contractor SouthWest Water on who will pay a $231,000 fine for a 100,000-gallon sewage spill last year.
“Three million is a pretty healthy reserve for this district,” said Director David Piepho. “But what I’m focused on is (possible expenses) that we may have ... I would love to be completely flatlined this year, but not at the risk of putting the district at risk.”
Director Shannon Murphy-Teixeira thought a minor rate increase this year might help stave off future larger increases. “I’m not a big proponent of rate increases; however, I’m concerned that if we don’t do it this year and we get hit with something, is the rate increase then doubled or tripled next year?” she said.
District Engineer Gregory Harris said he believed the decision boiled down to three points: “There are three big things that are driving this one way or the other. One is the reserves the district wants to hold onto. Two is the desire to participate and plan for maybe relocating offices to the civic center (community center), and three: do you want to budget for some unknown risk project related to wastewater?
“Could you not raise the rates this year? Yes. What that would mean is that the likelihood of a permit issue slamming you this year is low. What that also means is that the likelihood of a high-dollar item coming in the next five years is high and so we’re saying maybe to plan for it and save a little now, but even that is not a guarantee; it’s a perceived risk. We have an unknown risk and the question is: is the $3 million enough to cover it?”
While directors agreed that some budget items could potentially be removed, the issue of getting the remainder of the town’s biggest water users on the new metering system – which would generate thousands of dollars more per month in revenue – became a sticking point and ultimate negotiation tool for getting the budget passed.
“If I take the water users that I’m not collecting from now,” said Simon. “And collect that annually, I don’t think you’re going to need the extra $140 grand … I think what I’m asking is, how much do we charge the yacht club a year, for instance? They’re not metered; how much do we collect from them?”
“They pay $400 a year,” said General Manager Virgil Koehne, who added that there are approximately four large water users yet to be metered. “A ballpark figure? I think we should be collecting (from them) about $1,000 quarterly.”
Piepho commented that even with the addition of an estimated four large water users to the meter system, the numbers “still fall short of the $140,000,” he said.
“It kind of seems like we are talking about two different issues,” Piepho continued. “We’re arguing about the budget and saying we’re not collecting the revenue … what I would like to do is pass the budget on the premise that if the staff and we as a board don’t satisfy the needs of the district, which is collecting from all of the large water users, that in the following budget for next year I will vote on a decrease … Would that help move it along?”
“I would be a lot more in favor of it,” said Simon.
The budget was passed 4-0 with one absent. The final motion brought by Piepho called for a one-year, across-the-board increase of 3.1 percent, and called for staff to modify a timeline for the installation of meters for the larger water users.