McCarthy Withdraws Sewer Fee Boost; Council Political Concerns May Set Back Cecil Exec Drive to Stop Reserve Fund Raids

Cecil County Executive Alan McCarthy has withdrawn his proposed major increase in sewer user fees as part of his Fiscal 2019 budget, saying he wants to review alternative rate structures to give small users a break. But the action may signal a setback for McCarthy’s overall budget plans to end policies to tap emergency reserve funds to pay for day-to-day operations.

The County Council had been slated to review the proposed rate increases in depth at its Tuesday (5/15/2018) worksession, with an appearance by county Director of Public Works Scott Flanigan. But his appearance and the meeting agenda item were cancelled, after McCarthy ordered the rate increase proposal withdrawn on Monday.

McCarthy told Cecil Times on Tuesday that he withdrew his proposed rate increases so that county finance and public works officials could review the matter and perhaps come up with a more gradual rate increase and possible special rates for senior citizens and “small users” of sewage treatment services. “I want to see if we can come up with a more equitable way” to generate needed revenues to operate county sewage treatment facilities, he said.

That review will take the sewage services rate increase off the table in the current budget talks and timetable, with the County Council slated to adopt a new budget in early June for the budget year that begins on 7/1/2018. Any subsequent changes in the fee schedule would have to be presented as a budget amendment later in the year.

In his proposed budget for Fiscal 2019, McCarthy called for a massive increase in “wastewater” user fees, from the current $10.32 per 1,000 gallons of treated sewage flow to $15.70, to be phased in over three years. Detailed budget documents show that a key element of that proposal was to curb the past reliance on “unassigned fund balance,” or county emergency reserve funds, in order to bring the so-called “enterprise fund” into balance so that users of the services pay for the costs, rather than taxpayers countywide.

In the current Fiscal 2018 budget year, the overall county “fund balance” was raided for $2.1 million to help balance the sewage “enterprise fund.” That means that all county taxpayers, including those who live in rural areas with private septic systems, were subsidizing those residents in more urban areas served by public sewers. Such subsidies have been par for the course for many years in county finance policies.

McCarthy’s new budget sought to reverse that policy, by tapping just $166,916 in county reserve funds for the sewage accounts and instead shifting most of the burden of supporting sewer services to those residents who actually use them.

A knowledgeable county government source suggested that McCarthy’s proposal was designed to highlight just how much overall county taxpayers were subsidizing the sewer enterprise funds, and that he was always willing to consider a slower phase-in of rate rises for sewer users as part of a longer-term plan to bring the program into balance.

But the current County Council, like predecessors on the old Board of Commissioners, appeared reluctant to consider politically unpopular major rate increases for users of county sewage treatment services. At several recent Council meetings, worksessions and budget review meetings, at least two members, and possibly a three-member majority, indicated unhappiness with the proposed sewer rate increases.

And with three of the five seats on the County Council at stake in this year’s elections, political concerns cannot be underestimated.

A key element of the overall sewer plan for the county is the new budget’s provision to use over $1 million from casino revenues—the state Video Lottery Terminal (VLT) program—to pay for construction of new sewer pipelines in the Route 40 growth corridor, according to testimony by DPW chief Flanigan to the County Council on 5/8/2018. That represents the first time that VLT funds would be used to build infrastructure designed to attract economic development to the county, which Flanigan said was a permissible use of VLT aid under state law.

The withdrawal of the sewage fee boost proposal would not alter the planned use of casino/ VLT money to aid sewer infrastructure in the growth corridor of the county.