(5/21) With other local municipalities raising Water rates, the new Taneytown City Council voted to lower their rates by 5% instead. Mayor Christopher Miller asked City staff to include the 5% decrease in the draft of the Fiscal Year 25/26 budget in preparation for introduction at the May meeting. With Walkersville increasing their rates by 20%, Emmitsburg in turmoil over a 36% increase implemented in 2023 and Thurmont implementing an increase of 15%, the decision to lower the rates shocked City Manager Jim Wieprecht. He asked the Council why they wished to lower the rates and how the 5% number was determined. "I’m very curious as to how that is in the City’s best interest," he said.
Commissioner Harry Meade explained that besides traffic concerns, the water rates were the single most complained about item while he was campaigning. Commissioner Nick Kalinock kicked the question back to Wieprecht asking if the Water Fund was drawing enough funds to do all of the projects the City needed. Wieprecht said Enterprise Funds (which is where the Water and Sewer Funds fall under) are supposed to pay for themselves through the user rates which the City of Taneytown is doing, however, what the City has coming in as revenue is not enough to cover repairs. "Over the last five years the Utility Fund [both Water and Sewer] has come up with a surplus of $7.576 million. There are $11.8 million worth of projects just for water and sewer projected for the next five years," said Wieprecht. "I would suggest that our existing user rates are not adequate to cover the long-term maintenance of the system."
Councilman Christopher Tillman pointed out that the draft budget showed the revenue in the water fund at $2.7 million and the expenses at $2.7 million, meaning the Fund was capable of balancing, however the City’s debt service is not covered. Debt service is the total cash required to pay back all debt obligations. "We have a debt service on the Water and Sewer, so that’s $900,000 plus," he said. "How does that get paid?" Even after rental charges, interest and late payment fees the City’s debt service comes to approximately $565,000 that is not covered by revenue alone.
Wieprecht explained that in years past the City has borrowed from the Utility Fund balance to pay for the debt service, which is not an ideal solution. "The only thing it shouldn’t pay for is building additional capacity. That should be charged to developers but the maintenance of the system including money we have to borrow to maintain the system or have had to borrow in the past really should be paid by the user rates." He pointed out that the operating revenue and sewer user rates should generate enough money to pay for the capital project expenses as well as repairs.
Another issue with the debt service is the City is still carrying debt from the wastewater treatment plant’s construction. "I believe that debt has probably been refinanced into something else at this point." The City was under a consent order from the Department of the Environment because the old plant was overflowing regularly whenever it rained. The new plant was built to allow growth so it came with an additional cost that should be paid for by impact fees. He also explained that the cost of replacing the plant with the existing capacity was to be paid for by a base fee that was only charged for a couple of years but was intended to be charged for much longer. The base fee was removed because residents quickly grew tired of paying it, however Wieprecht suggested the Council could reinstate something similar.
The 5% decrease would amount to an estimated $169,000 which Miller pointed out "This is not going to break our piggybank." Wieprecht however reiterated his advice, "If the rates were adequate to sustain the maintenance of the system we would not have had $4 million worth of projects to catch up on."
The Council also introduced an Ordinance where a yearly workshop dedicated to the Water rates would occur in April. During this time the financial records regarding the water fund would be reviewed and adjusted; either increased or decreased accordingly.
The Council approved the introduction of both the 5% decrease and the yearly workshop dedicated to the Water Rates, but will continue work on both the budget and the Ordinance.
