Water and Sewer looking at cuts across the board
With water and sewer flows expected to be dramatically reduced for this upcoming summer season, the Water and Sewer Companies are also having to adjust their fiscal year appropriations accordingly.
Finance Director Amy Land and Assistant Finance Director Mona Helterline projected that water usage is expected to drop by about 50 percent and sewer flows are expected to decrease about 30 percent.
Projecting out for the 2021 fiscal year budget, this means user fee revenues for the water department will be somewhere in the neighborhood of $291,000 for 2021, when this year user fees are expected to bring in about $482,000 for the year ending June 30.
User fees for the sewer company are projected to be about $848,000 for next year, while this year those fees will bring in just over $1.1 million.
The members of the Water and Sewer Commissions discussed these numbers at their meeting on Tuesday, May 26, and mulled over the impact the figures will have on operations, salaries, and projects. While the water company had already included a 12.5 percent increase to user fees, in part because of the $2.3 million water main project on High Street, the members also requested that Land and Helterline analyze the impact that a 2.5 or 3.75 percent increase to user fees would have on the sewer budget.
This was recommended in part due to the fact that in order to keep both companies running, there was the expectation that cash reserves would have to be dipped into. Raising rates would lessen the amount needed to be taken from those reserves.
As for the water budget, the projected 2021 budget is $782,422, with an expected contribution from the reserve account of $204,508. (This year’s budget is $821,721.)
The 2021 sewer budget is expected to be $1,396,449, with a contribution from reserves at $315,355. (This year’s budget is $1,505,513.)
Contributions from the reserve fund for both water and sewer this year were zero.
The decrease in water company revenue is due to a projected 50 percent reduction in water usage.
“Did you consider anything other than 50 percent,” asked commission member Pete McNerney.
“We did run a couple of different scenarios for both water and sewer, but as we have more data as to how the flows are materializing, this is the best data we have,” said Land. “While there were other scenarios, this is what we’re comfortable putting forward today.”
Water Company Supt. John Breunig said he had consulted with Block Island Power Co. President Jeffery Wright, who is also expecting a 50 percent drop in electricity usage.
McNerney said that if usage reduction went no higher than 50 percent he’d “be happy with that.”
“Me, too,” said Breunig.
Almost every line item for both budgets was expected to decrease by some percentage, with very few staying level. The maintenance budget for the water company’s systems equipment, as an example, was reduced by 20 percent.
“Is that safe, John?” asked Water Commission Chair Brad Marthens.
“I think we’ll be alright. When we get to August, September we’ll have a better idea,” said Breunig. If water flows are stronger than expected, he said, the company will have greater spending flexibility.
Sewer Company Supt. Chase said that a significant amount of maintenance would not be done in the upcoming year, but said “I went through every line and looked at all recurring expenses to get a handle on what we need and what we want. I was able to separate the two. We are in a good place. There are a lot of things that need to be done, but I would never defer something that had to be done in terms of operations and to maintain permits.”
McNerney asked if the superintendents had factored in the possibility that some people and businesses might not be able to pay their bills this year.
“Some customers may just go out of business. I hate to say that. But if they’re at 50 percent of their budget, they’re not going to make it,” said McNerney, referencing the fact that many, if not most businesses will not be able to run at full capacity for most of the summer. “I have some concerns,” said McNerney.
“We haven’t applied a collection rate for user fees,” said Land. “We historically don’t for sewer and water. But we do need to monitor cash flow.” Land added that “both companies have a reasonable cash reserve position. Even if collections are lower than usual we have enough cash reserves to keep the company afloat for a reasonable amount of time.”
Reduced revenue will also lead to a freeze on wages and overtime. McNerney addressed the issue to both Breunig and Sewer Company Supt. Dylan Chase.
Reduced revenue will also lead to a freeze on wages and overtime. McNerney addressed the issue to both Breunig and Chase.
“I don’t disagree with you, Peter. I wish we could give raises, but the optics are really bad. There are people going out of business,” said Chase. “We have spoken to our employees and they understand what the situation is. Everyone is going to have to tighten their belts across the board.”
Breunig added, “They are happy to have a job at this point.”
“The general mood here is just that everyone here is grateful to be working right now. We’re looking at all options and everything is on the table and they understand that completely,” said Chase.
The Town Manager Search Committee has been meeting by Zoom for the past couple of weeks, according to Chair Margie Comings. “We’ll be doing a second round of interviews very shortly and we’ll have a report for the Town Council in early June. We have a few more things to do in the process.