By Yvonne Wenger, The Baltimore Sun
7:04 PM EDT, July 3, 2013
Baltimore officials voted Wednesday to raise water and sewer rates by 42 percent over three years, despite residents who pleaded for relief and a city audit that called the increase "higher than necessary."
Mayor Stephanie Rawlings-Blake, who controls the spending panel that approved the increase, said she didn't have the "luxury" of voting against it. As mayor, she said, it's her responsibility to work to prevent breakdowns and repair water system problems.
"Crumbling infrastructures have reached a crisis point in cities across America, including Baltimore," Rawlings-Blake said. "With unfunded federal mandates, limited resources and a system that is literally crumbling, we have no choice but to pay more to keep our system working."
The Board of Estimates voted 3-2 to improve an increase of 15 percent this year, followed by an 11 percent increase in both fiscal year 2015 and 2016. The increases take effect July 1 of each year.
Bills for a typical customer, including homes and businesses, would jump by nearly $100 in the first year and $250 after three years, according to the Department of Public Works.
The city's water system serves 410,000 residential and commercial customers. About half are in Baltimore County, which has the funds to absorb the water rate increase, so homeowners and businesses there will not see their bills go up — at least for a year.
Don Mohler, chief of staff for County Executive Kevin Kamenetz, said that while the county has decided to keep rates flat this year, it has not yet determined rates for the following two years. "We analyze it each budget cycle," Mohler said of water rates. (County residents pay sewer rates separately as part of their property taxes.)
Last year, city officials acknowledged that they had overcharged 38,000 customers, mostly residential, by at least $4.2 million and issued refunds. Meanwhile, the city allowed some big companies, nonprofits and government offices to run up delinquent accounts totaling more than $10 million, a review by The Baltimore Sun found.
City Council President Bernard C. "Jack" Young and Comptroller Joan M. Pratt voted against the increases. In addition to the mayor, Alfred H. Foxx, the director of the Department of Public Works, and Deputy City Solicitor David E. Ralph voted for them.
Young noted that residents are already being forced to pay a new stormwater fee, which will be listed in their water bills. "I thought it was overburdensome for the citizens to take another hit."
The audit analysis showed that an increase of 13 percent is necessary for water and 12 percent for sewer this year. The auditors recommended 11 percent increases in each of the next two fiscal years for water and 9 percent and 10 percent, respectively, for sewer. It called the mayor's proposed rates "higher than necessary."
The auditors report to Pratt, who sometimes clashes with Rawlings-Blake.
Marvin L. "Doc" Cheatham Sr., a former NAACP official, said the vote showed the officials' disregard for residents. He said the mayor's reasoning was "justification to go ahead and do what they planned to do in the beginning.
"It's an insult to the citizens that you ask for the audit, you get the audit and then you don't vote in support of the audit. ... " Cheatham said. "It shows there is a major disconnect between the citizens of Baltimore and our leadership. It is going to make seniors and folks with low income suffer with tax increase over increase, our pockets are already empty."
Small business owner Kim Letke said she had lost all trust in the Department of Public Works' financial integrity.
"The customer pays a tax to the city and they are entrusted with this integrity. Where is the fiduciary responsibility?" said Letke, who owns Letke Security Contractors.
Last week, the board took testimony from nearly 20 residents who were angry about the increases. Additionally, Rhonda Wimbish, a community activist from Northwest Baltimore and a real estate agent, gave City Hall about 650 protest letters.
Rawlings-Blake said she understood the outrage of residents over the rate hikes, but warned that the city could end up in deep financial problems if she did not generate more revenue.
"I expect there to be unrest. I expect there to be rancor," she said. "But I don't want the disappointment and the frustration and the sadness that cities like Detroit have to face. ... You can't make everyone happy and have major reform at the same time."
She encouraged low-income homeowners and seniors to call 311 and ask about assistance programs if they have trouble paying their bills.
But Pratt said approving rate increases three years at a time is "unfair" to residents. She recommended that the Department of Public Works compare actual revenue against projections after each year to see if the increases are merited.
She also called on the city to do more to collect unpaid water bills.
The audit showed that more than 15,000 city accounts have water bills that are more than 260 days overdue. Those outstanding balances total $24.5 million, including $11.4 million from businesses.
City auditor Robert L. McCarty said $7.3 million is owed by RG Steel, which has filed for protection under federal bankruptcy laws.
By comparison, the first year of the rate increase is expected to generate $40 million in new revenue. The second and third years would generate $27 million and $29 million, respectively.
Rudolph Chow, director of the city's Bureau of Water and Wastewater, said that following the auditors' recommendations would put the utility at "undue undo financial risk." He acknowledged the uncertainty of predicting future revenues and said any surplus would be used to offset future increases.
"We've done our homework," said Chow, who last week told the board the city's rate with this year's 15 percent increase is lower than that of most major East Coast cities, including Atlanta and Washington. The city also charges less than other places in the region, including Baltimore and Howard counties, he said.
The mayor said the lack of a serious bipartisan discussion in Congress is hurting U.S. cities that are struggling to manage federal mandates such as the Safe Drinking Water Act and a consent agreement with Baltimore to upgrade its wastewater system.
Baltimore Sun reporter Luke Broadwater contributed to this article.
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