Wolfeboro water and sewer rates going up 8 percent on Oct. 1
Change will appear in January 2010 bills
September 10, 2009
WOLFEBORO — Following a lengthy review of budget shortfalls and projections from Public Works Director Dave Ford, selectmen voted to increase both water and sewer rates by eight percent, effective Oct. 1.
Although the new rates will take effect in October, users will not see the increase in their quarterly bills until next year.
Rate adjustments are needed because Wolfeboro's water and sewer services are enterprise funds that are supposed to be self-supporting and not rely on general tax revenues. Because of the limited number of users and the need to keep septic effluent away from Lake Winnipesaukee, the town decided years ago that capital costs for sewer improvements would be paid by tax revenues, but that operating costs would be paid by users. For the water department both capital improvements and operating costs must be paid by the system's 3,000 users.
The problem in a nutshell, according to Ford, is that expenses have been higher than projected and usage of both water and sewer are down.
On the expense side, operating costs for treating and distributing water have increased modestly and generally come in below budget, but payments of principal and interest on water line improvements have increased steadily from $490,887 in 2006 to $816,695 in 2009.
On the revenue side, the town has collected less than projected by usage, hookup fees and hydrant fees.
Water usage has declined by 10 percent over the past two years. In 2007 the town introduced a conservation rate that rewarded users who could get their usage under 5,000 gallons per quarter, since the first 5,000 gallons are included in the basic $50 unit charge. Above 5,000 gallons per quarter, the user pays $9.64 per 1,000 gallons in addition to the $50 unit charge. Many users responded to this incentive by getting their usage under 5,000 gallons per quarter, thus reducing the revenue from gallon charges.
Because of the water moratorium there were no fees for new connections, but even after the moratorium was lifted last year, the economy has depressed the housing market and connection fees have been below projections (down $13,000 in 2008). Ford is hoping connection fees will increase from $18,000 in 2009 to $40,000 in 2010.
The third revenue area is hydrant fees, which are charges made to the fire department for maintaining hydrants. Due to adjustments made in the budgeting process the hydrant fees have never been charged at the planned 20 percent of expenses and were $30,000 lower in both 2008 and 2009 and stand at only 17 percent.
In 2008 a deficit was avoided thanks to the receipt of two grants totaling $201,268, both of which related to prior work. In 2009 the projected deficit is $126,568. In 2010 the proposed eight percent increase will produce $98,000 in new revenue at present usage. That increase, together with flatlining the 2010 operating budget, will avoid a deficit in 2010, Ford said.
Under the eight percent increase, the base unit charge will go from $50 per quarter for the first 5,000 gallons to $54 per quarter. Conservation rate users will see a total cost increase for the year of $16.
Selectmen Linda Murray said the major cause of the increase is the cost of repaying bonds for the extensive work done since 2005 to reduce leakage and improve water quality. Those improvements led to the doubling of principal and interest payments since 2006.
Ford reported that sewer usage went down even more than water usage since 2006. Brewster Academy for one installed 40 "deduct meters" to measure how much water was being used for watering and thus does not enter the sewer system. Despite being in the top 10 percent of sewer rates in the state, the sewer fund has produced deficits in each of the last four years, ranging from a high of $54,410 in 2006 to a low of $15,491 projected for 2009. Implementing an eight percent increase will turn a projected loss in 2010 for $82,854 to break even, Ford said, assuming usage remains the same. The 2010 expenses include a contingency of $50,000 in case effluent spraying needs to be done.
Selectman Kristi Ginter moved to approve the rate increases and Selectman Marge Webster seconded. The vote to approve the increase as of Oct. 1 was unanimous.