HOLYOKE — To address a persistent deficit in the city’s sewer enterprise fund, the Public Works Commission has proposed raising the sewer rate to $8.02 per 1,000 gallons used.
Mary L. Monahan, the commission’s chair, informed the Holyoke City Council’s Ordinance Committee of the recommendation. Monahan elaborated: “The Division of Local Services has told us they will not approve a tax rate for the city unless the Enterprise fund comes in with a balanced budget.”
Monahan said the recommended increase includes additional adjustments, such as adding $135,000 to the sewer enterprise account. The adjustment aligns with the average of $235,000, representing the past five years’ costs associated with sewer breaks.
By contrast, the previous year’s allocation for the enterprise account was only $7,500.
“It’s apparent, intent or not, the budget has come in underfunded, which creates that issue of where we find the funding for the deficit,” Monahan said.
She presented three sewer rate options, including the “highly recommended” rate of $8.58. However, considering the city’s finances, the Division of Local Services was uncomfortable with the rate.
Option two carried a rate of $7.88 and tapped into an outside funding source. The option did not include the additional $135,000 to close the deficit. The $8.02 rate would impact residential users by $7.55 per quarter.
The City of Holyoke contracts with Veolia North America, formerly Suez, for wastewater treatment and street sweeping services.
The commission’s efforts go beyond immediate fiscal concerns.
“This comprehensive examination identified many things we should know more about moving forward,” Monahan said. She proposed an in-depth study of the sewer rate and associated costs.
The study would scrutinize operational costs, evaluate potential charges for different users and explore the costs of maintaining city systems like stormwater and flood control.
Mayor Joshua A. Garcia will seek $400,000 from available funds to support the review. The hope is that by fiscal year 2025, the city will have a clearer understanding of the financial demands of the enterprise fund and how to meet them sustainably.
In 2020, interim Mayor Terence Murphy sought an $8.05 rate. Instead, the City Council compromised at $7.50 per 1,000 gallons used. Monahan alluded that adopting the initially recommended rate might have prevented recent deficits.
The Massachusetts Department of Revenue has repeatedly cited the enterprise fund deficit and the city’s antiquated financial management system.
The current fiscal year 2024 budget recommendation is based on available data. Monahan cautioned the council: “All of this works if you do it all together. Otherwise, we’ll have the same discussion a year from now.”
Councilor Joseph M. McGivern opened the discussion, highlighting the challenges of a balanced budget, especially as billing for the first quarter of the fiscal year had begun.
“Even if we pass the rate in an upcoming city council meeting, it’s not going to go out until the second quarter,” he said.
Later in the discussion, McGivern noted that the wastewater treatment plant, constructed in the 1960s, was inadequately sized to cater to the city’s needs. This oversight, he claims, led to current stormwater problems.
Councilor Israel Rivera spoke about past discussions on rate increases and missed opportunities.
“If the council had voted for this two years ago, we might have made steps in the right direction,” Rivera said.
Councilor Linda Vacon was concerned about the financial burden on taxpayers, especially those without access to the sewer system.
“For the last five years, these taxpayers have been subsidizing the sewer system with their property taxes,” she said.
Monahan stressed the system’s reciprocity, noting that “ratepayers have also subsidized citywide stormwater management.”
Councilor Kevin A. Jourdain called for transparency and a detailed examination of the $7.3 million contract, emphasizing the importance of understanding where every dollar goes. He worried about the system being used to circumvent budgetary limitations, ultimately affecting the residents.
“The last resort answer is always a rate increase. It’s a circumvention of (Proposition) 2 1/2,” Jourdain said.
