Budget Buster: Flow, Flushes

COURT HOUSE — It’s a fall thing. The Cape May County Municipal Utility Authority (MUA) projects any additional expenses that will probably be levied against a municipality when the year’s final accounting of sewer flow is done the following spring. 
Last year unanticipated charges forced an emergency appropriation which reverberated on the Middle Township municipal budget eventually passed for 2018.
The added charges over what the township had budgeted in 2017 contributed to an overall municipal tax increase for 2018 and led to higher rates for commercial users of the municipality’s sewer system.
The problem is back again and threatens to become the new normal. The end-of-year projects for what Middle will owe the MUA after the final audit in April show a likely bill that is $327,000 higher than what the township allocated. 
Josh Palombo, wastewater program manager for the MUA, explained at the Nov. 19 township work session that the reasons driving a higher expense for Middle Township are structural and rooted in the way the MUA budget is allocated to its participating municipalities.
The expenses of the MUA are allocated to the 14 municipal participants based on use. The problem at present is that significant shifts have occurred since 2015 in the proportionate use of the MUA’s services by municipal partners.
The shifts have left Middle with larger bills.
According to Palombo, the MUA budget has two major components. The fixed portion of the budget reflects costs like salaries, facility expense, vehicles, and other similar items.
First Part Explained
This fixed portion of the budget represents the MUA staffed at levels necessary to meet the peak demand on the utility during the height of the summer. To allocate this fairly among the participating municipalities, the MUA uses metered-flow data from the summer season.
Second Part
A second part of the MUA budget deals with variable expenses, those expenses that vary with total annual flow. One example is the amount of chemical purchased to treat wastewater. A different allocation mechanism is used for this part of the budget making use of metered annual flow from each municipality.
The important point in the allocation scheme is that it is based on proportionate use. A municipality’s actual flow can theoretically stay the same, and yet its allocation could rise if the flow of other municipal partners drops since such action would change the proportionate share of the overall expense. With Middle, its flow has been increasing, but the big determinate of its higher expenses has been that its proportionate share has grown even faster.
The facts as Palombo explained are that a number of the island communities are showing lower flows to the MUA, decreasing the percentage of the overall budget they must cover with MUA fees.
According to Palombo, Ocean City, one of the MUA’s largest participating municipalities, has been decreasing its flow annually.
A 1 percent decrease in the Ocean City flow decreases its expense by $300,000, he said, leaving that expense to be apportioned across the other MUA partner towns.
The pattern Palombo described, one of island community flow decreases and a shifting expense burden on mainland communities, is not a one-time event. It has been building since 2015 according to MUA data.
Palombo offered some possible reasons for the shift which include new construction on the islands that result in more efficient water use. Low-flow toilets are one example.
Another factor influencing flow could be infrastructure investments being made by island communities as part of their resilience efforts.
New sewer mains and pipes reduce infiltration of the sewer system by rainwater with a resulting reduction in flow to the MUA.
Palombo noted that statistics show a decrease in flow on the islands during the weekdays of the summer season. The weekends are busy as ever, he said. Weekdays in the summer are starting to look like fall and spring.
Is this a side effect of lower tourism numbers? Could it be a shift caused by greater second-home use of island residences as opposed to summer rentals?
The reasons aren’t clear, but the trend is.
Barring a new allocation mechanism or a significant decrease in MUA fixed costs, a new normal may be developing. Municipalities like Middle Township with large land areas, aging infrastructure, older homes and a larger share of the commercial users will have difficulty reducing flow. The result could be a new, higher level of proportionate responsibility for MUA expense.
To contact Vince Conti, email vconti@cmcherald.com.