Part of sewer-rate hike plan OK'd

NASHUA – Public works commissioners this week endorsed a portion of a recommended sewer rate structure, approving a 15 percent increase for fiscal year 2010.

That proposed increase will next be hashed out in an aldermanic committee before going to the full board for approval in April or May.

The Board of Public Works took no action on the other portions of a sewer rate study that recommended increases that would add up to 45 percent over five years.

The proposed rate increase was included in a sewer rate study report that the city’s chief financial officer, Michael Gilbar, first presented to the Board of Public Works in February.

Under the proposal, sewer rates would increase by 15 percent in fiscal year 2010, which begins July 1, and again by 15 percent in 2012 and 10 percent in 2014. If approved, these would create a cumulative increase of more than 45 percent over current rates.

For the next fiscal year, the 15 percent increase would mean that homeowners would see their sewer bills increase by an average of $36 a year, or $9 a quarter, Mayor Donnalee Lozeau said.

But at a meeting Monday, the public works board opted to approve only the first year. Commissioners agreed to look again at the numbers next year before deciding on a future increase.

The sewer system’s operating expenses outpaced revenues beginning in 2005, according to statistics provided by Gilbar. That has caused the city to dip into cash reserves, he said.

The deficit is partly because the Board of Public Works approved a 30 percent rate cut in 2003, when operating revenues were about $2.5 million more than expenses. Now, operating expenses exceed revenue by more than $700,000, according to Gilbar’s numbers.

Furthermore, in 2003, the city’s estimated cost for the mandated combined sewer overflow project was $43 million, according to Dave Fredette, the city treasurer and tax collector. Now, the cost of the project has topped $70 million.

Alderman-at-Large David Deane said the shortfall happened because required financial analyses weren’t done at a time when cost of the sewer overflow project skyrocketed.

“There’s an ordinance in place that they do a yearly analysis of the fees. That never got done,” Deane told a reporter Tuesday.

During the Board of Public Works meeting Monday, Deane noted that the sewer project was to be funded partly through cash and partly by borrowing, but a bond was never issued.

The city’s next deadline for the project is March 31, when it has to tell the EPA how it intends to proceed with the improvements.

Also during the meeting, the public works commissioners approved a Sewer Department operating budget for next year of $11.45 million. The budget was in line with the mayor’s requests of all departments to hold spending increases to 1 percent.

However, two board members attempted to cut an additional 2 percent – or roughly $229,000 – from the bottom line. That attempt failed by a 3-2 vote.

Commissioners Donald Dyer and Tracy Pappas voted for the additional cut. Lozeau, who chairs the board and is a voting member, said it would be hard to find where that money would come from.

“I’m not prepared to say, OK, we can lop off another 2 percent,” Lozeau said.

A 2 percent cut would require a reduction of staff, Fredette said.

“I don’t know of any other way to do it,” he said.

The bottom line of the sewer budget could still be changed by the mayor or Board of Aldermen before the city budget is adopted.