STONE HARBOR – The borough’s Utility Committee chair Bernadette “Bunny” Parzych told her colleagues on the borough council that the utility committee would be recommending as much as an 8% increase in water and utility rates Oct. 7. She said the recommendation is the product of weeks of discussion and analysis.
As is the case in many of the county’s municipalities, Stone Harbor’s water and sewer utility is a standalone entity with its own budget. It receives no support from the taxpayer fund. Fees from water and sewer usage are the main source of its revenue.
Parzych said that the utility, which is required to be self-financing, has been “subsidizing” ratepayers for years. She did not provide details on how that subsidy worked when ratepayers are almost the sole source of revenue. In the 2022 budget, rents and fees were over 99% of the total revenue of the utility.
Parzych pointed to several factors which she said made a rate increase necessary.
She noted the costs associated with the state-mandated effort to check for and remove the infrastructure that may allow lead to seep into the water delivery system. She said that is being done “block-by-block” at great expense.
Parzych also referenced the cost of wastewater processing by the county’s Municipal Utility Authority (MUA). In the 2022 budget, the fees paid to the MUA amounted to $1.6 million of the Stone Harbor utility’s $5 million budget. This amounts to about one-third of the annual revenues from property owners, a percentage similar to other municipalities and better than some.
Parzych also spoke of the “everyday costs” associated with the five-member dedicated staff, meeting state and federal requirements for testing, and the expense of chlorination.
The real culprit in the water and sewer rate hike is likely another factor that Parzych noted: the utility’s high debt level. Parzych said the utility had an accumulated debt of $27.5 million. The fiscal 2022 budget shows over 40% of the utility’s revenue going to debt service.
This is a problem the borough’s general fund budget has as well. In both its operating and utility budgets, debt service is too high for the level of revenues being generated through taxes or water and sewer fees. Debt service is constraining what else the borough can do with its revenue without raising taxes or fees. In the case of the water and sewer utility, Parzych is opting for an increase in rates.
A public discussion of the proposed rate increase is promised for the council work session and meeting Oct. 18.
– Vince Conti
Email: vconti@cmcherald.com
