[Mpls] Water and Sewer stuff

[Bob GUSTAFSON]

Steve Meldahl writes:   "First off, the water department rates have risen five fold over the last 10 years.  The reason is that they did not want to raise the tax ie mill rate on taxes which would hurt entrenched politicians in the polls.  They assumed correctly that people would not notice the rate increase in their water bills so readily and also they could claim all the rate increases were for new infrastructure needed. By law, the water department is an enterprise fund and can not make much of a profit, or they have to adjust their rates downward.  They have not been doing this and have been violating the law."   BG The increase in the water department rates was recommended and supported beginning with the 1999 budget by the Capital Long Range Improvement Committee (CLIC). For new members to the list, CLIC is a volunteer group of citizens that evaluates and recommends to the Mayor and Council a capital program for the city. The committee felt that the infrastructure, as detailed in a previous post, was in need of major repairs and in the case of the ultra filtration, a major and very costly upgrade.   You are right in watching funds such as utility billings for a "hidden tax". This rate increase however was recommended by citizens and then presented to the politicians. There was no smoky back room deal on this. Now as a member of CLIC if we could smoke a cigar at one of the meetings I would find that totally cool, but I suspect I would be hit over the head by other members of the committee and the offending cigar would probably be shoved some place I would rather not think about   I'm confused by your posts claim that water rates have risen five fold over the last ten years. Perhaps you could share where you are getting your numbers because they don't relate to what I am able to find and what I quoted previously. All I have is a record showing a base rate of $3.70 per 100 cubic feet in 1997 to a projected $6.47 in 2006. That just doesn't seem to be a fivefold increase. Let me know if you have a source for different numbers.   You seem to imply that the rate increase was some sort of false front for a hidden tax and that the politicians could claim that all the rate increases were for the new infrastructure needed. First of all you should note that an inflationary factor of 3% per year was also included in the proposed rate increase by CLIC for management and operating costs. There was never any claim the increase was only for infrastructure. As noted however, the infrastructure costs to bring our system up to the levels of demand placed on it by our citizens, our regional and federal government are significant. Which of the improvements would you recommend cutting back on?   You close with a claim that the water department is breaking the law by making a profit. I always wonder when I read financial statements if I'm reading the right line but when I look at the numbers from the year 2000 (the most recent year I have) it looks like after they paid all their bills they were left with a "profit" of less then 1% of revenue. On total revenues of $111,556,882 having less than $1 million at year end doesn't seem too excessive. In fact in my world of accounting, that is calling it fairly tight. Now I get my numbers from the city planning department so if you are aware of some Enron type of accounting here I would be interested in hearing about what you know. I suspect the numbers are pretty honest.   Bob Gustafson MMM