On May 14, the New York City Water Board voted to increase water rates by 11.5 percent for the next fiscal year - the first double-digit rate increase since 1992 - and have projected double-digit increases into the future.
It is a heavy straw to add to the backs of property owners, who are still shouldering a significant part of the burden of property tax increases. In particular, the impact of the rate hike on homeowners and renters will be substantial.
This is a matter of particular concern to the 250,000 one- and two-family homeowners in Queens, whose average property tax bill has increased by about $1,315 - a whopping 79 percent - since 2001.
That rise has taken place as New York City homeowners have experienced average annual heating bill increases of close to $850, electric bill increases of approximately $210 and water bill hikes of roughly $130.
That places a greater onus on elected officials to seek out creative solutions to the escalating costs faced by property owners in our City. I have asked the Water Board to look beyond the current year and consider a plan to re-balance the annual demand on ratepayers and the system’s long-term capital needs.
While the Water Board sets the rates, some of the monies pass to the Water Authority to pay for its own capital needs and to the City’s Department of Environmental Protection to pay for system operations and maintenance.
The Water Board also uses ratepayer funds to make rental payments to the City for use of our assets and to pay off old water-related bonds. The formula that determines rent paid to the City is tied to capital debt service.
Notably, since Fiscal Year (FY) 2005, rent has exceeded debt service on the old bonds and that “excess rent” will grow to $76.7 million in FY 2008 and a projected $175.1 million by FY2011.
Rather than allowing the excess rent to flow directly into the City’s General Fund, I propose sharing it equally between two uses: first, to address the immediate stress on ratepayers and, second, to provide long-term ratepayer savings.
Half of the excess should be rolled forward to reduce rate increases. The other half should go towards reducing our debt by funding water and sewer capital projects on a “pay-as-you-go” basis.
Based on estimates by my office, if one-half of the excess rental payments were applied to rate relief and the other used as pay-as-you-go capital, we could achieve close to $278 million in savings for ratepayers over the next four years.
My proposal is both equitable and fiscally prudent. It reduces some of the burden on property owners while at the same time slowing down the creation of new debt.
The Water Board has said that during its June meeting it would seriously review this proposal to inject a greater degree of fairness into our water rate system. Now is the time to keep the pressure on.
William C. Thompson, Jr. is the New York City Comptroller.
