The January 6th Commissioner’s agenda included a discussion and rate study presentation by Town Manager Yost about the water and sewer fund, which is supposed to be fully supported through user fees was operating in a deficit. During the last fiscal year close-out, a $77,000.00 shortfall was reported. It should also be noted that this is a challenge that Commissioners have been dealing with for several years and the General Fund has been paying for the difference.
Over the years, the Commissioners have slowly raised water and sewer rates in response to rising costs (i.e., inflation, labor) for ongoing system operations and maintenance; However, the rising costs have outpaced the increases. The large capital investments to address aging infrastructure (capital projects and debt) have always been funded through the General Fund.
The Town is now facing higher costs for labor, chemicals, and materials. Stricter regulatory requirements for both drinking water and wastewater treatment require the Town to invest in advanced treatment technologies to ensure water quality. While these regulations are crucial for public health, they also increase operational costs and can be energy-intensive processes. Rising energy costs directly impact the cost of providing water/wastewater services.
Comparisons of other water/sewer providers rates were included in the presentation to exemplify that Poolesville rates were significantly lower. These other providers were facing the same costs for labor, chemicals and materials. While many costs such as chemicals and sludge hauling are set through the market, labor, our largest expense, has been a challenge. The Town has attempted to keep up with the labor cost through salary studies and cost of living increases. Our employees are licensed by the State the same as other providers, who pay more, and in some cases, we have lost employees to these other jurisdictions.
Manager Yost has provided recommendations to the Commissioners to help cover the inflationary costs and maintain compliance with the regulatory mandates. The proposed new rates were developed using key principles and are spread out over the next 3 years to avoid “rate shock”.
The proposed rates, starting in July 2025, would increase by 5%. Rates would then increase again by 5% in July 2026 and then another 5% in July 2027. Even with these adjustments, the proposed rates are still the lowest relative to other area water/sewer providers.
Amended rate categories are also recommended to support low/fixed income users, encourage conservation without penalizing families, support local businesses and have non-taxpaying users pay actual costs.
The proposed rates and category changes are required to proceed through a public process and eventually be adopted by the Commissioners to go into effect.
A draft resolution will be developed by staff and presented at the January 21, 2025, Commissioners meeting.