Council votes on hike in water rates
CFO says many variables contribute to water bill
BY LAYLI WHYTE
Staff Writer

One summer it didn’t rain enough; the next, it rained too much. The inconsistencies of nature have caused the Red Bank Water and Sewer Utility to run at a deficit, resulting in higher rates for residents.

At a special meeting March 9, the Borough Council introduced the 2005 municipal budget, which includes a $200,000 allocation to cover an anticipated deficit in the water utility for the current year.

To cover the deficit, the council introduced an ordinance that would increase the water rate for this year by 14.25 percent. According to borough Chief Financial Officer Terrance Whalen, this means the total anticipated amount of money to be collected is $4,888,063.83.

“That’s the total amount we need to collect in order to have the budget balance,” said Whalen.

Whalen said that he could not give an average-per-household rate because there are too many variables to consider in water rates.

“It’s based on usage and flow,” he said.

Mayor Edward J. McKenna Jr. explained that the water utility, by law, must be self-sufficient. Instead it has been operating at a deficit for the past two years, he told the council.

“The council made a decision to not increase the water rates for 10 years,” McKenna said.

He said the borough was confronted with one of the driest summers in 25 years two years ago, when prohibitions on water use caused a drop in revenues from the water and sewage utility.

“The subsequent year,” said McKenna, “was one of the wettest summers ever, so there was little demand for water. It was nothing less than a freak of nature to have these two summers back to back.”

McKenna added that the sewer collapse on Maple Avenue toward the end of last year only added to the problems with the utility.

McKenna advised that if the council did not pass the ordinance authorizing an increase in the fees, the water utility would not be self-sufficient, which would be illegal.

McKenna said the borough had anticipated higher revenues from new water meters that were installed in 2002 and 2003.

According Whalen, the revenues anticipated in 2003 were $508,272, but only $340,977 in revenue was realized. In 2004, the borough anticipated $873,196 in revenue, but realized only $669,461.

Whalen said he agreed with McKenna’s assessment of the situation.

“The mayor couldn’t have said it better,” said Whalen in an interview last week. “We had two summers in a row that caused some problems.”

At the budget meeting, Councilman John P. Curley made an unsuccessful motion to defeat a raise in the water utility fee.

Curley, who is the chairman of the finance committee, said that the Red Bank Water Utility has been losing money for the past three years, and that in that time, the borough has had to “bail it out.”

“Residents in the borough can’t afford any further raises,” said Curley.

McKenna said that although he agreed with Curley’s point that residents of the borough do not want to pay a higher rate for water, it remains more economically feasible not to outsource the water utility.

The borough uses its own water for most of the year, but purchases water during the winter months from the New Jersey Water Authority, according to Whalen.

Councilman Pasquale Menna said that he would make a motion to pass the ordinance increasing the rates, adding that whether or not to sell the water utility has been a topic of discussion during the past 15 years.

Councilwoman Jennifer Beck said that she recommended an amendment to the ordinance, which would include a provision for a cost/benefit analysis of the water utility every five years.

“The last one was 10 years ago,” noted Menna.

McKenna said that during his time on council and as mayor, an analysis has been done four times.

“After every cost analysis,” he said, “it always comes up that the people who will suffer the most are the residents. The ones we most want to protect are the residents.”

Curley said that although he understood what McKenna and Menna were saying, he still believed that the ordinance should not be passed.

“Government is in a business it shouldn’t be in,” Curley said. “I guess it’s just a philosophical difference.”

Both Curley and Beck voted against the ordinance, with the remaining four council members voting in favor of it.