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Sunday, June 14, 2009

Oriental Water Fund

An Oriental resident recently expressed concerns about the Town Commissioners' increase of the basic water rate by one dollar per month.

While it is true that any increase in fees, no matter how small, adds to the burden of citizens at a time of economic stress, a number of factors make this measure necessary:

  1. Oriental has been losing money on water due to higher prices for treatment chemicals, more stringent testing requirements and salary increases over the past eight years;
  2. Oriental's Water Fund is an enterprise fund - required by state law to be self-supporting;
  3. The Water Fund reimburses the general fund (general tax revenue) for administrative costs - principally salaries of town staff for time spent managing the water system;
  4. The administrative cost was last calculated in 2001 - since that time costs have escalated;
  5. For the past eight years,the General Fund has charged $48,000 per year, despite the fact that actual costs have increased to nearly $82,000 since 2001;
  6. Since 2001, the gap between actual cost and the reimbursed cost totals nearly $150,000;
  7. The commissioners were reluctant to burden ratepayers this year by increasing water rates to cover the entire cost, because of the poor state of the economy;
  8. For the coming fiscal year, commissioners increased reimbursement from the water fund to the general fund from $48,000 to $72,000, still about $10,000 short of actual costs;
  9. The plan is to recover the entire cost in next year's budget.
The bottom line is that Oriental's taxpayers have been subsidizing the water system for the past eight years. We have to stop this practice.

David Cox