Dalton Uses Sewer Stabilization to Makeup Sewer Bill Shortfall
DALTON, Mass. — The last sewer bill that the town received from Pittsfield was $70,852.75 more than the originally estimated.
According to Pittsfield's Finance Director Matthew Kerwood, Mayor-elect Peter Marchetti will look favorably on a new approach to rate increases that will make budgeting for Dalton more predictable, however there will still be some level of fluctuation from any estimate, Town Manager Thomas Hutcheson said.
Marchetti is proposing an "annual increase at some objectively defensible rate, perhaps the Consumer Price Index" rather than once every three years, Hutcheson said.
During a special town meeting in August, voters approved raising the sewer user fee by 8 percent to cover the expected increases. At the time, the Pittsfield's estimate was $1,333,307, but it has since increased to $1,404,159.75.
The town will be tapping into its sewer stabilization fund to cover the additional cost, so the increase will not affect ratepayers.
The biannual metered rate per 1,000 gallons will remain at $4.54 and the annual flat rate will remain at $504.
"I learned that the Pittsfield sewer account has been running into deficit for years. The Department of Revenue really doesn't like revenue deficits, and has been taking the deficit from their retained earnings," Hutcheson said.
"Finally DOR required a real fix, and they and Pittsfield settled on this year's 25 percent rate hike. That's part of the $71,000 increase above last year's estimate."
There were multiple reasons for the increase including the pandemic, changing nature of market prices, and additional expenses from the Wastewater Treatment Project, Department of Public Services and Utilities Commissioner Ricardo Morales said in an interview.
In fiscal years 2020 and 2021, the city decided not to increase its sewer rate to provide relief to the ratepayers.
Although there was a recommended zero percent increase in FY20, there was a recommended 15 percent increase in FY21 that Pittsfield covered with its retained earnings.
The city is now out of its retained earnings so it no longer has the funds to make up for the increases in market prices exacerbated by the pandemic and the added expenses from the multimillion dollar project at the wastewater treatment plant, Morales said.
The wastewater treatment plant project was required to meet federal regulations and reduce excess water from entering the system.
"The construction project was ongoing when the pandemic occurred and that's relevant because we saw the need for not increasing significantly or at all the rates and hit the ratepayers with yet another increase," Morales said.
"And then on top of that, as I said before, the postpandemic world market and all that has been very volatile and different."
Dalton's bill is based on the town's biochemical oxygen demand, which is the amount of oxygen required to remove organic matter from water, the town's total suspended solids, and the flow in millions gallons, Morales said.
Based on that information, the city generates a usage factor. The cost of maintaining and operating is divided between Pittsfield and Dalton based on the usage factor.
The 25 percent increase will allow the city to raise enough funds to cover expenses and also rebuild the retained earnings that have been drained over the last five years.
"We build up retained earnings, it's very important to have retained earnings to help mitigate any unforeseen conditions and on a year-to-year basis," Morales said.
"The way we build that back is by collecting a little bit more than what we spend on an annual basis."
Morales said the hope is that there won't be a deficit next year.
If there is a deficit, Hutcheson said, it will be much smaller but the town may make another transfer of funds from the sewer stabilization account.
Tags: sewer rates,
