The Bourne Board of Sewer Commissioners discussed this week one of the most heatedly debated issues over the past month, in an effort to find a solution. Board members took up the question of the town’s sewer budget with an emphasis on building sewer retained earnings.

The discussion took up a good portion of the commissioners’ remote meeting on Tuesday, April 27. Members agreed that a budgetary policy has to be established for how revenue is contributed to the retained earnings account as well as use of the funds in the account.

Tuesday night, the chairman of the sewer commissioners, James L. Potter, presented a proposed Sewer Enterprise Fund Financial Policies and Guidelines document for discussion. Included in the policy are sections regarding retained earnings, which are likened to free cash in the town’s general budget.

The policy cites recommendations from the Massachusetts Division of Local Services that discourage the use of one-time revenue sources, which includes retained earnings, to fund operations. Doing so, the division stated, “effectively postpones difficult decisions necessary to achieve a structurally sound, sustainable spending plan.”

The proposed policy calls for a gradual decrease in the use of retained earnings in the sewer operating budget by an amount to be determined annually, until there is zero use of “one-time revenue sources for recurring costs in the annual sewer operating budget.”

Mr. Potter proposed a formula under which the sewer department budget would be developed. As proposed, the budget would comprise at least 30 percent of the general operating budget, three years of capital debt service, plus the anticipated costs in Bourne’s five-year capital plan.

The formula also included Bourne’s share of the capital costs associated with operating Wareham’s wastewater treatment facility. An intermunicipal agreement between the two towns allows Bourne to send 200,000 gallons of wastewater a day to the Wareham plant.

Mr. Potter told the board that the anticipated capital expenses at the plant come to roughly $9 million. Bourne’s obligation to that cost, he said, comes to $1.6 million.

Fellow board members were in favor of the formula as proposed by Mr. Potter. Jared P. MacDonald said it was “pretty spot-on” and “seemed to work.”

Mr. MacDonald suggested that the formula be applied to previous years, randomly selected to see how well it works in general. If it shows a minimal use of retained earnings in each case, he said, “it may be a very good formula that we can incorporate into the policies and use moving forward.”

Finance committee chairwoman Mary Jane Mastrangelo said that Bourne’s sewer enterprise fund operating budget contains a certain amount of funding for Wareham’s treatment plant operating budget. Ms. Mastrangelo said the same amount should not be included as a separate item in Mr. Potter’s formula because it is already in the budget.

“I think it’s great to have a calculation, it’s great to start the discussion,” she said. “I think we just need to be careful about what the calculation is and what’s included in it to make sure that it’s accurate.”

Both Mr. Potter and Town Administrator Anthony E. Schiavi said the formula can be tweaked to include whatever is deemed necessary. Mr. Schiavi noted that the town has to have sufficient savings set aside in the event that Wareham has a capital project that Bourne has not heard about or planned for but is still partially responsible for paying the cost.

“Where we are right now isn’t even close to where we should be,” Mr. Schiavi said, “and we need to start working our way in developing a plan to continue to build that retained earnings.”

The issue of retained earnings has been the subject of discord in recent weeks between the Bourne Finance Committee and the sewer commissioners. The commissioners’ recommended sewer budget includes $50,000 in retained earnings to subsidize a substantial rise in sewer rates.

The finance committee wanted to use $135,000, but the commissioners argued that supplementing user rates was not a good use of retained earnings. Board members said that even $50,000 should not be applied for rate reduction. Retained earnings, the board said, should only be tapped for infrastructure repairs to the sewer system.

Following a joint session on Monday of the finance committee and the Bourne Board of Selectmen, who double as sewer commissioners, the finance committee narrowly voted to approve the sewer budget with the $50,000 appropriation from retained earnings.

The meeting also included discussion on what to do with a $1,165,103 grant from the Cape Cod and the Islands Water Protection Fund. The grant was awarded to the Town of Bourne for the wastewater treatment facility project. However, specifics relative to disbursement of the funds have not been determined yet.

“I wish we could talk some more about how we can utilize the subsidy,” Mr. Potter said, “but we can’t because there just aren’t the guidelines from Clean Water Trust as to how they’re going to apply the subsidy to the town.”

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