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Published: Saturday, 11/27/2010

Utility hikes costly - inaction more so

Don Moline cites the folk wisdom attributed to Benjamin Franklin: When the well's dry, we know the worth of water.

Mr. Moline is field operations commissioner of Toledo's Department of Public Utilities. The department, a unit of city government, wants big annual increases in the rates it charges users for water and sewer service, starting New Year's Day.

By the time the increases take full effect in 2014, assuming the City Council approves them, they will cost the average residential customer nearly $400 a year more than he or she pays now. And utility rate hikes, unlike many tax increases, aren't subject to popular vote.

It's the political equivalent of the classic physics paradox: the irresistible force - the growing cost of essential public services - meeting the immovable object - recession-battered constituents who don't want to, or can't, pay.

"Our reserves are exhausted," Mr. Moline says. "We're at a critical juncture with respect to maintenance. We have to deliver the services. Our rates are lower than other cities'. So this is what we've got to do."

Only in Never-Never Land can we expect government to give us more and better services without ever handing us a bill. But such unusually large rate hikes, while the local economy remains bad and unemployment stays high, will mean financial hardship for a substantial number of the system's 130,000 city and suburban customers.

So before council members vote on the increases, Mayor Mike Bell's administration must make a compelling case that it needs every penny of the new money it seeks, and that the water and sewer system is operating as efficiently as it can.

Among the irresistible, or at least undeniable, forces behind the rate proposal:

• The city is spending $521 million to upgrade its wastewater treatment plant and make other sewer repairs, to meet a federal consent decree intended to clean up what the system dumps into Maumee Bay.

The U.S. Environmental Protection Agency already has extended from 2016 to 2020 the deadline for the city's compliance with the mandate. It's not likely to relent further.

• Three-fourths of the city's water and sewer infrastructure predates World War II, Mr. Moline says; 20 percent of it is 100 years old or more. Rust and decay accompany its advanced age. The city averages a water main break nearly every day.

The system's water treatment and reclamation plants, its water-distribution, sanitary-sewer, and storm-water systems, and the equipment that maintains them, all need big improvements that can't wait. Unless, of course, you're willing to risk service failures, blowouts, and sewer collapses that tie up - or flood - city streets, and will cost much more to fix than to prevent.

• Water consumption, by residential and business customers, has declined during the recession. The city expects to collect about as much revenue for water service this year as it did in 2005.

Administration officials say they have just about exhausted the once-robust emergency reserves in the water and sewer funds. They insist they must propose big rate hikes now because previous mayors didn't seek increases that were large enough to pay for necessary maintenance and repair sooner. Not surprisingly, the ex-mayors challenge that assertion.

The typical Toledo residential customer pays $164.35 every three months for water and sewer service. For elderly taxpayers who qualify for a homestead discount, the typical quarterly bill is $73.76.

If the proposed rate hikes take effect, by 2014 the average residential customer will pay $262.88 a quarter. The bill for the average senior customer will rise to $117.69.

City officials remind us that Toledoans pay less for water and sewer service than do their counterparts in Akron and Cincinnati and Cleveland and Findlay. They note that water and sewer rates in Columbus, which have nearly doubled since 2005, will go up again in January.

Of course, we don't live in any of those other cities; we live here. And city voters' overwhelming defeat this month of the Toledo Public Schools property tax plan suggests the degree of local resistance to giving government more money.

That attitude indicates the hurdles the city must surmount to get ratepayers to buy into the proposed water and sewer increases. Elderly and disabled taxpayers properly get a break on their bills, but other low-income homeowners for whom the rate hikes will cause economic hardship deserve a reasonable discount too.

The city cites figures from the Regional Growth Partnership estimating that spending related to the sewer cleanup over the next decade will create nearly 500 full-time direct and indirect jobs and $19.5 million in payroll, and contribute $60.8 million to the regional economy.

But there are jobs, and there are jobs. To maintain credibility, the public utilities department needs to shed once and for all its traditional reputation as a place to stash patronage workers.

Ultimately, our area would be best served by a genuinely regional water and sewer authority that includes Toledo, its suburbs, and perhaps even our neighbors in southeast Michigan. The city is talking with other communities about that, but those conversations must lead to action.

Toledoans expect - and deserve - adequate supplies of clean, safe drinking water and efficient, environmentally sound sewage removal. The providers of these public services must price them fairly, to meet the true costs of maintenance and needed improvements.

The Bell administration needs to show it is doing just that, and contributing to economic development and environmental health, with the expensive infrastructure improvements it seeks. The bar is high, as it should be.

But if the city can make a persuasive argument for the rate boosts, the investment will be worth the cost.

David Kushma is editor of The Blade.

Contact him at: dkushma@theblade.com



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