New York City Comptroller William C. Thompson, Jr. today criticized the Water Board for failing to follow through with promises to address future swelling water and sewer charges. At a City Council hearing yesterday, the Water Board disclosed that it is planning to propose a rate hike of 12 percent for Fiscal Year 2011.
“The Water Board’s plan to seek yet another double-digit rate hike next year demonstrates that it does not intend to stop squeezing money out of the pockets of New Yorkers at a time when we can least afford it,” Thompson said. “Water rate payers’ bank accounts are not an unlimited resource.”
Thompson further noted his disapproval of the Water Board’s intention to implement yet another rate hike in Fiscal Year 2012 of 7.5 percent.
“The fact that these future rate hikes are already built into the Water Board’s projected budget underscores the City’s failure to complete a timely alternative rate structure study that would help to create a more equitable payment system,” Thompson said. “Therefore, it is vitally important that we continue to make our voices heard and demand that the Water Board work to protect ratepayers.”
Thompson has been urging members of the public to attend the Water Board hearings taking place this week in each of the five boroughs and advocate against this year’s proposed 14 percent rate hike. The remaining hearings are scheduled as follows:
BROOKLYN: Tonight – Wednesday, April 29th at 6 PM
Location: Brooklyn College
Student Center, Alumni Lounge
(opposite Whitehead Hall)
East 27th Street and Campus Road
MANHATTAN: Thursday, April 30th at 5:30 PM
Location: St. John’s University
101 Murray Street
Earlier this month, Thompson testified before the Water Board and offered five key recommendations to address escalating rates:
- The Water Board must complete and make public a promised million-dollar study of alternative rate structures. That study was intended to help the Water Board set rates this year.
- Excess rent now being paid by the Water Board to the City –to exceed $200 million by 2012 – should be rebated back to the water system to be used for pay-go capital spending and rate reductions.
- Governor David Paterson must support direct granting of all the federal stimulus money that is dedicated to clean water and drinking water projects in New York State – nearly $500 million.
- The City’s Department of Environmental Protection (DEP) should be required to cut its operating budget by 5%, as other City agencies have been required to do.
- We must ensure that the New York City water supply west of the Hudson River is protected from proposed gas drilling that could necessitate the construction of a $10 billion filtration plant.
During his remarks, Thompson faulted DEP for failing to produce its study of the rate structure prior to its Fiscal Year 2010 proposal. In May 2008, the Water Board committed a million dollars of ratepayer money to review how other utilities across the country structure their rates and to examine ways to inject a greater degree of fairness into our system. Then-DEP Commissioner Lloyd promised that the Fiscal Year 2010 water and sewer rates would take into account the results of this study.
“By not producing the study as promised, the DEP is trying to keep the public out of the rate-setting process.” Thompson said. “That is an outrageous breach of responsibility.”
The Water Board leases the water and sewer infrastructure from the City. Rental payments are based on a formula that, until recently, reimbursed the City for water-related debt service on bonds issued before the Water Authority was created. Since 2005, however, the formula has led to rental payments in excess of the underlying City expense.
Thompson charged that this formula is forcing water ratepayers to subsidize the City’s General Fund, because “excess rent” flows into that fund and is used as general revenue. In Fiscal Year 2009, such “excess rent” will total nearly $123 million, and this is predicted to swell to more than $200 million by Fiscal Year 2012.
Over the last two years, Thompson proposed rebating the “excess rent” back to the Water Board to offset the cost of running the water system. In Thompson’s plan, the “excess rent” would have been split equally for two purposes: ½ for pay-as-you-go capital spending, which reduces costs over the long term, and ½ for other water system expenses, which would lessen the need for rate increases.
Additionally, Thompson identified another source of revenue to prevent water rate increases: federal stimulus money. Under the terms of the stimulus bill, the New York State Revolving Fund will receive approximately $432 million for clean water projects and $82 million for drinking water projects. However, only half of that money currently is slated to be distributed in the form of direct grants or similar deep subsidies.
In a letter – available at www.comptroller.nyc.gov – Thompson asked the Governor to support direct grant allocation of all of this money because of the overwhelming needs of the water systems operating throughout the State, and the New York City Municipal Water Finance Authority in particular.
Thompson further said the DEP should reduce its operating budget by 5%. The DEP has been exempted from the same belt-tightening reductions required at other city agencies because it relies on water and sewer rates instead of tax revenue.
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