The Bourne Board of Sewer Commissioners has taken steps to reduce a sewer rate increase anticipated to be in the hundreds of dollars. The board has voted to approved an adjusted budget that will cut by more than half an expected $500 user rate hike.
The vote to adjust the budget was approved during the sewer commissioners remote meeting Tuesday, March 23. Town Administrator Anthony E. Schiavi presented the amended budget to the board. Mr. Schiavi said the budget could be reduced by $230,450.
Areas in which the budget could be reduced, he said, include an estimated $100,000 that had been appropriated for decommissioning the failed shared septic system on Savary Avenue in Sagamore Beach. A letter was sent to the Army Corps of Engineers informing the Corps of the town’s plans for the system. The Army Corps provided the easement that allowed for installation of the system.
Mr. Schiavi said that the Army Corps has not yet responded to the town’s letter. He said the decommissioning cost would be backed out of the budget while the town awaits a response relative to what the Army Corps expects.
“Then we can bring that back and have a discussion on whether that gets paid by the budget, through retained earnings or gets paid with some other funding,” he said.
There is also the cost of paying off loans for the new wastewater treatment plant under construction in Buzzards Bay, as well as operating and maintaining the new facility. Mr. Schiavi said that one of the loans for funding the plant’s construction had an original closing date of April 2021 for when debt service would begin. Mr. Schiavi said that closing on the loan is now likely to be sometime in October.
“We were able to make some adjustments in our long-term debt service for principal interest that will help to reduce the size of the sewer budget,” he said.
Mr. Schiavi said the adjusted sewer budget will be part of the overall budget presented for resident approval at Annual/Special Town Meeting in May. Even after the general budget is approved, with the amended sewer budget, efforts will continue to further reduce the impact to sewer users.
“There are a lot of factors that are impacting the fund, but also the users that are on the system, and the rates they’re paying,” he said.
The administrator estimated that, with the adjustments made to the sewer budget, user rates will increase by a relatively modest $216.
Board chairman James L. Potter pointed out that the reduction was only temporary, and the remainder will have to be paid for at some point in the future. Mr. Potter said the reduced rate may appear more palatable because “you’re upping it now, and then you’re upping it a little more next year, instead of a big hammer all at once.”
Mr. Potter questioned whether cost savings could be reaped from delaying putting the plant into operation, savings that could be applied to the sewer budget in the future. He noted that some of the grant sources awarded funding to the wastewater plant project, based on dates when the plant would go into operation. However, slowdowns in construction, caused by the pandemic, might offer a reprieve from earlier deadlines, he said.
“So we can potentially save some costs there,” he said.
A stark difference of opinion regarding how to address the substantial increase in sewer user fees was expressed by Mr. Potter and Finance Committee chairwoman Mary Jane Mastrangelo. Ms. Mastrangelo suggested that the rates should be subsidized by retained earnings from the Sewer Enterprise Fund.
Last year, the commissioners approved the use of $185,000 in retained earnings to subsidize an increased user rate, Ms. Mastrangelo said. She added that there is currently $639,000 in retained earnings. Taking $150,000 from the account to help users would still leave the account with more than a half-million dollars, she said.
There is also money in the sewer reserve fund that will be transferred to the retained earnings account at the end of the current fiscal year, she said. The town is also on target to receive funding from the Cape and Islands Water Protection Fund because of the new wastewater treatment facility, she said.
“We have to look at the whole picture. We have to look at retained earnings, we have to look at the budget, we have to look at the long term, and we have to look at the current situation as a temporary situation pending additional flow and additional revenue coming in,” she said.
Mr. Potter disagreed wholeheartedly with Ms. Mastrangelo’s approach to the use of retained earnings. The chairman said that using sewer retained earnings to subsidize increased rate fees “is what got us here,” referring to the $500 projected rate increase.
He suggested the sewer budget should not even include the $50,000 in retained earnings that is being used “to soften any kind of blow we can.” He maintained that retained earnings are not meant for operational costs. That account should only be tapped for capital improvements to the sewer system, he said.
“We have no money for that, none, because finances weren’t handled correctly,” he said.
He added that the current balance in retained earnings money would not pay for replacement of a sewer pipe. The town would still need to borrow money to pay for that kind of repair, he said.
Mr. Potter reiterated his belief, stated during the board’s February 23 meeting, that the cost of operation and maintenance of the new wastewater facility should be shared across the entire town, and not only among the 1,100 rate payers in Buzzards Bay.
The new plant, he said, should be viewed as offering all residents a shared economic benefit at a shared cost. For that reason, he believes a new sewer department should be created which would be responsible for the wastewater facility. The department, he said, should be funded through the general budget and not an enterprise fund.
The commissioners voted unanimously to approve the amended sewer budget. Mr. Schiavi noted that the board meets in its dual role as selectmen next Tuesday, March 30, to vote approval of the town’s Fiscal Year 2022 general budget.