Havre de Grace’s mayor is calling for several fee increases in his proposed fiscal year 2020 city budget to generate revenue so officials can “aggressively” take on the replacement of aging water and sewer infrastructure.
“We’re going to aggressively go after it and be preemptive rather than reactive,” William T. Martin said as he introduced his budget to the City Council Monday evening. “It’s just getting to a point where we’re having more and more water line breaks, constantly.”
The mayor presented what he called “a very, very lean budget” for FY20, which begins July 1, including a $15.37 million general fund budget that is about $1.5 million less than the current year’s budget.
The general fund includes more than $1.76 million in capital expenses — $1.215 million in projects and equipment replacement plus $551,600 in debt service. The mayor noted a $500,000 remediation of stormwater management infrastructure in the Bradford Green subdivision, the result of the city’s negotiated agreement with the Environmental Protection Agency to fix deficiencies in its stormwater management program. That is the largest capital expense in the proposed budget, followed by $450,000 for street repairs.
Martin also presented a $10.7 million budget for the water and sewer fund, an enterprise fund also known as Fund 9. The fund faced a number of financial challenges in prior years as the city’s housing market struggled to recover from the Great Recession of the past decade.
The fund has stabilized in recent years as the city experienced an increase in new housing construction, plus Martin added a $25 quarterly debt service fee when he took office for his first term in 2015. That $25 fee ended once the current fiscal year began July 1, and Martin emphasized Monday that his proposed infrastructure replacement fee “is not the debt service fee in disguise.”
Martin said he structured the new fee so “the great majority of users” will incur a $10-a-month, or $30 a quarter, charge. The infrastructure replacement fee is projected to generate $817,500 in revenue next year, according to the budget.
The mayor showed the audience in the council chambers photos of cracked water and sewer lines, as well as lines that have been repaired with metal clamps and lines filling with rust-colored sediment that he said decreases the flow through the pipes. Martin noted many Havre de Grace water and sewer lines date to the 1920s and ’30s, even “some from the [President] Teddy Roosevelt administration.”
Martin also showed a map of the city dotted with colored markers identifying multiple utility line breaks dating back to 2016. A chart indicated 89 total breaks from 2016 through the current year, with a total repair cost of $536,515. He said it is very difficult to budget for unanticipated utility line breaks.
“Everything seems to be going right, and then you have break after break after break, and it just eats up the money in the water and sewer fund,” he said.
The mayor does not plan to increase metered water rates, but he does plan to increase the quarterly base fee from $18.75 to $20. Martin also plans to increase capital connection fees, charged to developers to connect new dwellings to the water and sewer system, from $17,200 to $18,500.
New housing construction has increased in recent years, with new dwellings in communities such as Bulle Rock, Scenic Manor and Greenway Farms, although growth is expected to “return to a more traditional level in fiscal 2020,” Martin said.
“Construction has picked up, and in order to shorten that [funding] gap and not put everything onto the citizens, we put another $1,300 onto the water and sewer hookup fee,” he said.
Citywide property assessments, which are set by the Maryland Department of Assessments and Taxation and released every three years, decreased in the 2019 tri-annual assessment, the second consecutive decrease, as they also went down in 2016, according to the mayor.
Martin said city officials were “all pretty confident” that the state would show an increase in the assessment for 2019, considering so many new houses have been built.
“The value of our city went down, which threw a curveball at us because we believed that the city would be more valuable with more homes, more construction, but now our pot of money is the same but yet other anticipated costs increase,” he said.
Martin said the city’s wage and benefits commission has recommended a 2 percent cost-of-living adjustment for employees “across the board” next year, plus employee health insurance costs are expected to increase.
The mayor recommended keeping the real property tax rate the same at 56.5 cents per $100 of valuation, however.
“I am not increasing the tax rate, effectively reducing taxes, because I am seeking to increase water connection fees in 2020,” Martin said.
Finally, the mayor proposed a $628,400 marine facilities fund, including $60,000 in capital expenditures, for next year.
The City Council, which has the final say on the budget, will host public work sessions and public hearings throughout the spring and is scheduled to take its final vote in June.
The first work session, on the general fund, is scheduled for 6 p.m. Monday in City Hall at 711 Pennington Ave. A work session on the enterprise funds is scheduled for 6 p.m. April 8, and a session for the final review is set for 6 p.m. April 22.
“I put this in the hands of council, this infrastructure replacement program, for them to consider it and to talk about it at the upcoming work sessions,” Martin said.