Township Committee Discusses Sewer Budgeting

The 2012 Municipal Budget was the main topic on the agenda at the Montville Township Committee Meeting Tuesday, with the focus on sewer rates and the large sewer rate operating surplus that has reached approximately $2.4 million since the rates were set in 2009.

Victor Canning, the new township administrator, reported the total appropriations for the municipal budget as just over $28 million for 2012, representing a 2.37 percent increase from last year and . However, until Canning establishes new sewer rates and determines how the surplus will be used, the committee cannot finalize the 2012 budget. A Long Term Financial Planning Committee (LTFPC) has been studying the issue to understand the cause and develop a cost analysis, methodologies and recommendations.  

The sewer bill is divided into two portions: residential customers pay a fixed amount of $95 per quarter plus a variable rate of $3.65 per thousand gallons used. The LTFPC has been meeting to evaluate the information and came up with a proposal to lower the fixed amount to $80 and the variable to $3.10. The Township Committee seemed eager to plug these numbers into the budget, but Canning said he is working with the township auditor and needs more time. He agreed to have the information ready for the next committee meeting.

"We are trying to do this as fast as possible, but haste makes waste,” Canning said. “The expenses projected did not materialize as anticipated, so we are able to lower the rate. There is a recommendation given to the town auditor, who has some concerns in terms of legal issues that need to be reviewed. The rates as proposed may stay or may be adjusted depending on legal issues. The goal is to have new rates in place, lower rates in place, by July 1.”

The surplus is also an issue holding up the budget. While there are several possible scenarios that include paying down debt, funding capital projects, or a rebate, it is considered a special circumstance that requires weighing in by the Attorney General’s office to determine that any disbursement is done fair and equitably. This will be a subject of future committee discussions.

Committeeman Scott Gallopo said he wanted to start discussions Tuesday and not be looking at it in July. He wants to do it in two pieces, starting with the fee structure, then waiting until the office reviews the numbers and decides what to do with the excess surplus.

“I’m looking to avoid what’s been plaguing us for the last year and a half,” Gallopo said. “It’s hurry up and slow down."

Canning said the Attorney General’s office knows that the issue is hinged upon the township adopting its budget.

“There are a few issues the auditors are concerned with,” Canning said. “Suffice it to say that we have to sit and look at everything. You’re correct in that the rates and the surplus are really two different issues, however, there is always the technicality of the state giving us the direction that could affect our debt, and how we’re paying it down, and how we plan to pay it down with suggestions from long term finance committee. That could have a bearing on the whole equation, which then could translate to where we’re going in the future.”

Committeeman Jim Sandham pointed out that despite the error that created the surplus, the process is not a worst-case scenario.

"First of all, we’re only as good to determine rates as the information we got,” Sandham said.

The Township Committee had varied opinions on how the rate structure should be set up, and the role the auditor should play in the process. Committeewoman Deb Nielson felt it should have been decided earlier in the process, and pointed out that the LTFPC has already put in a tremendous amount of time and effort on this particular topic, going back a year and a half.

“I’m a little dismayed that we brought in our auditor within the last couple of weeks, and that the auditor was not part of the process of identifying some of these potential hiccups prior to recommendations and should have been part of the process,” Nielson said.

Sandham said the auditor should have been talked to up front, but rather than being too involved in developing the rates, he should be a sounding board at the end. He said he disagreed with some recommendations because they did not encourage conservation. He felt that moving some of the fixed costs bill to the variable column in the sewer bill would encourage high-end users to conserve water and save money. 

“If the variable is higher and I’m gonna pay more if I use more, it’s gonna force me to conserve. So I would take some of the cost that’s fixed and put it in the variable column and in doing so, you’ll drive up the variable rate and drive down the fixed cost.”

Sandham noted that this had been discussed previously.

“The last time we went through this, we heard particularly from the senior citizens about the dollars that they were paying on a daily basis for a fixed charge,” Sandham said. “‘But I only flush the toilet twice a day and my fixed charge is $80 a quarter and I can’t do anything about lowering that fixed charge.’ So if we lower the fixed rate from $80 down to $50 and increase the variable rate from $3.10 to $3.35, that variable rate is still lower than we’re charging now, so everybody would see a decrease in variables and a much more significant increase in the fixed rate. And if I were designing it myself that’s how I would do it."

Gallopo disagreed.

“If we want to start pressing for a policy on conservation, that’s fair game, but I think the task at hand is to charge an appropriate rate for a service that we deliver,” Gallopo said. “I understand how you want to promote conservation."

Sandham said it is important to protect the aquifer not just from an environmentally conscious perspective, but from a perspective that this is the township's main source of drinking water.

Nielson says she wants to see the incremental savings after it’s calculated out. Gallopo said he wants to make the process fair.

“We want to delve into how important $100 or $500 is to a particular business; whether it’s going to put anyone out of business over the course of a year," he said.

Mayor Tim Braden asked committee members to put suggestions in writing and send them to the LTFPC and let them respond.