Sewage Fees: Another ‘Holy Crap Moment’ Faces County Council; Will They Punt Again?

July 18, 2018


The three water-filled jugs placed in front of the witness table at the Cecil County Council worksession on Tuesday (7/17/2018) were a graphic show-and-tell representation of what has been described in the past as a “holy crap moment” in the long and politically torturous saga of providing and paying for adequate sewage services in the county.

One jug was a murky shade of deep brown: untreated raw sewage as it flows through pipes into the county’s Seneca Point treatment plant on the Northeast River; one jug contained amber-hued water from the river itself, the same waters local residents enjoy for swimming and fishing; and the final jug contained crystal clear water discharged from the state-of-the-art treatment plant.

The jugs were also a metaphor for the county’s fiscal health and the questions facing the County Council: will the county continue to take the murky waters route to bury the actual costs of providing sewage services to those who use the facilities by raiding general revenues provided by all taxpayers, including those who do not use the services? (That ‘brown jug’ option cost general fund accounts $3.2 million in Fiscal 2017.)

Or will the Council choose an amber-hued middle ground, raising user fees slightly but still subsidizing the sewage accounts with general funds? Or will the Council take the clean, clear waters route to set the sewage funds on a firm path to self-sufficiency without raiding general taxpayer funds?

County Executive Alan McCarthy is pushing for the clean water option and proposed major increases as part of his Fiscal 2019 budget proposal. But he withdrew them after several Council members signaled resistance, especially in an election year when three Council seats were at stake. After a study to review the fee proposals, McCarthy presented a modified plan on Tuesday that would keep higher fees but impose them at different thresholds of usage—with a reduction in minimum charges for small users of sewage services and a new two-tiered category for major industrial users.

So, for small users, who previously had to pay for a minimum of 10,000 gallons of sewage flow, that minimum would be reduced to 9.000 gallons per quarter. Currently, a 9,000-gallon user would pay $103.20 per quarter but under the newly proposed plan that cost would rise to $106.83 as of 10/1/2018, or a total increase of $3.63. In subsequent fiscal years, the rates would rise further, even for small users, to $122.85 per quarter for a user of 9.000 gallons as of 7/1/2019—a $19.65 increase per quarter over current costs. And in Fiscal 2020, the rates would rise again, bringing the bill to $141.30 per quarter for a 9,000-gallon user, or an increase of $38.10 over the current cost.

Over half of the county’s 5,931 sewer accounts use less than 9,000 per quarter and would qualify for the lower minimum usage rates, according to documents submitted to the Council.

Clearly those increases are not welcome either by users or members of the County Council. “It’s going to be a tough sell,” said Joyce Bowlsbey (R-2), President of the Council. “But we have to take a look at the costs and benefits,” she added.

“We know this has never been right, and, Scott, every year you come here and beg and we say no,” she said, nodding toward Scott Flanigan, the county’s director of Public Works.

“We recognize this is a heavy lift we are asking you to do,” Flanigan replied.

But perhaps the Council should also consider the costs that all taxpayers are paying to subsidize those who use county sewage services. All taxpayers paid a subsidy equivalent to $539.53 to each of the 5,931 sewage users in Fiscal 2017, when the fees paid by users came up $3.2 million short. The “wastewater enterprise fund.” is supposed to be fully paid for by users of the services but for decades all taxpayers have been subsidizing the account.

Councilor Bob Meffley (R-1) noted that the county executive had recently cut in half hook-up fees for some residents currently using septic systems but living along sewer lines and delayed the time frame, mandated by state law, for connecting to available sewer lines. But in helping those people, “we put the burden on somebody else,“ he said.

Flanigan replied that it was like putting pressure on a balloon: squeeze one area and the air pops out in another segment of the balloon.

Lisa Saxton, the county’s Director of Finance, said that the financial imbalance in the wastewater fund posed a very real threat to the county’s bond rating, and the interest rates paid on bonds used to finance all major construction projects by the county. She said that bond rating agencies scrutinized the accounts and “this was a hot topic with the bond rating agencies.” She said that a downgrading by just one level from current bond rating status could cost the county $1.5 million a year in higher borrowing costs for roads, bridges and other projects.

Even if the county executive’s proposal were enacted intact, it would still inject just $825,000 into the wastewater account in the current Fiscal 2019 budget year. So general taxpayers would still have to subsidize the sewage account this year. But county officials estimate that the account could be brought closer to balance over the next three years or so, but still with a deficit of over $800,000 by Fiscal 2022, if fee boosts are enacted now.

County Executive McCarthy told Cecil Times that he was concerned with the fiscal stability of the wastewater account and trying to bring it into balance was part of his overall fiscal strategy to make county finances balanced and transparent. In his first two budgets, McCarthy ended a decades long practice in county budgeting to raid “unassigned fund balance” or emergency reserve funds to pay for day to day operating expenses. Instead, his operating expenses have been balanced by revenues received in the same budget year.

Apart from the money, McCarthy said he was concerned with public health and safety, citing many areas of the county where failing septic systems pollute rivers and creeks, endangering swimmers and local residents. But without adequate funds in the sewage accounts, expanding services to address health issues could be impossible.

Saxton and Flanigan pointed out that the wastewater fund currently has no reserves to put money aside for future expansion or major repairs of sewage treatment facilities and pipelines, a fiscally risky approach that could cause major problems, both operationally and fiscally, in case of a major weather or mechanical emergency.

A major investment in county sewage facilities came with the recent major upgrade of the treatment plant at Seneca Point—officially, the Northeast River Advanced Wastewater Treatment Plant. The plant was upgraded to meet or exceed ever escalating state and federal environmental standards, at a cost of $33.6 million. Without the upgrade, and investment in a high-tech liner that would allow expansion on the site if needed in the future, the county could have been shut down for future development and slapped with millions of dollars in fines by state and federal agencies.

In 2013, the normally strait-laced Flanigan surprised the-County Council by telling members that the county had faced a “holy crap moment” several years earlier when officials realized that unless the Seneca Point treatment plant were upgraded, there would be no available sewage capacity for new business or residential development and environmental agencies could sharply limit operations at the facility. “You might as well put up a closed for business sign” at the county’s borders, he said.

The Seneca Point upgrade came in about $6 million under budget, due to a competitive economic climate in which bidders were anxious to get the job and scaled back profit margins to win the contract, as well as careful monitoring of the project by the county’s DPW.

Flanigan said he anticipates the facility can handle projected increases in usage, even with expanding business and economic development in the county in the past two years, and the plant will not need to be expanded for another 10 to 20 years.

Maybe by then the county will have started building up reserves in the wastewater fund to cover the potential costs.

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One Response to Sewage Fees: Another ‘Holy Crap Moment’ Faces County Council; Will They Punt Again?

  1. Real Republican on July 18, 2018 at 4:06 pm

    Remember when Diana Broomell, along with her mentor Michael Smigiel sabotaged the sale of wastewater assets to Artesian? Would have reduced county costs.

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