New Orleans — Sewerage & Water Board officials spent hours Wednesday afternoon explaining to the City Council’s Budget Committee spending and other details of a proposed rate hike that would double monthly bills during the next eight years as the utility aims to increase revenue to pay for a multiyear, multibillion-dollar program to rebuild its finances and aging infrastructure.
The City Council likely will vote today on the proposal that would see 10 percent annual rate increases that will generate $583 million by 2020. That money will be matched with federal money to fund the work that will cost $3.3 billion.
While there is little debate that the rate increases are necessary, Council President Stacy Head has derided the possibility that the decision could be made by the end of the day, claiming that the Landrieu is rushing to push through the proposal before answering some of her questions and before the public has had enough time to voice its concerns.
Wednesday’s meeting called by Council Vice President Jackie Clarkson late last week was not publicized well enough and happened too soon before the vote, Head contended.
In an emailed statement she released hours before the meeting, Clarkson said that the move isn’t popular but that it needs to happen sooner rather than later.
“The issue of funding to repair our water system has been before the public for several years. The S&WB rate study was released 6 months ago and the S&WB held public meetings at the beginning of this year,” the statement reads in part. “It will never be popular to raise the rates, and that is why every administration and council has been putting it off. It is not popular, but it is the right thing for New Orleans.”
Mayor Mitch Landrieu delivered an impassioned speech to the New Orleans Chamber on Wednesday morning, urging the vote to go ahead as planned. He said the rate increase could be the most important vote the council will undertake in recent years and that there already have been more than three dozen meetings about the proposed rate increases.
He also echoed concerns he’s previously made that for too long officials have put off major decisions such as the proposed rate increases. Doing so again would result in more inaction, Landrieu said. “Delay kills,” he said.
One concern several council members had, along with the Bureau of Governmental Research, is how the $583 million will be spent.
While the BGR supports the increase, it noted in a new report that less than half of that money would go toward capital projects, while about $242 million will go toward the day-to-day operations.
Council members said they need to see a better breakdown of how that money will be spent.
“The lack of a well-conceived and articulated plan increases the potential for waste and inefficiency and raises the specter that the agency will merely plod along,” the BGR report reads. “Developing a clear spending plan should be a high priority for the S&WB.”
Also, the BGR noted, the S&WB needs to follow through with a proposed governance restructuring to ensure that the public is better served.
According to S&WB data, $203.7 million will go toward capital project financing. About half of that money will be used to bond out about $650 million in work.
About $54.6 million will go toward previous liabilities, while $48.7 million will go toward building up cash reserves, which were depleted after Hurricane Katrina, and $33.6 million will be used to cover decreases in current funding.
S&WB and city officials said they need to move as quickly as possible to comply with deadlines associated with a 1998 consent decree based on the condition of the city’s sewer system or face fines that could amount to $3.7 million.
“There’s never a good time (to ask for more money) ... but we’ve reached a point where something needs to be done,” said Robert Miller, deputy director of the S&WB.
Landrieu said that the project is too sprawling to wait until every minute detail has been hammered out before acting upon it.
“It’s the beginning,” he said. “It’s not the end.”
According to city and S&WB officials, the average monthly residential bill using 5,300 gallons would increase from $52.50 this year to $112.67 in 2020.
While many business leaders threw their support behind the proposed increases, many of the individuals who spoke during Wednesday’s 41/2 -hour meeting, which drew all seven council members, voiced concerns about what the higher bills will do to their finances.
They asked that the vote be delayed to allow more time to prepare for and study the changes.
“No one can dispute something needs to be done ... but we need to do it right,” said New Orleans resident Janet Hays, who also urged the utility to fix its own governance issues before going after higher water and sewer rates. “We all know the road to hell is paved with good intentions.”
The budget committee voted at the end of the meeting to send the proposed ordinances to the full council today. Discussion is set to begin at 11 a.m. at the earliest, though that time could be pushed back because of the meeting’s fluid schedule.
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