A Rare “Zero Percent Increase”

With uncertainty over impact of new water meters on user costs, selectmen voted to keep sewer rates the same

By Mark E. Vogler

SAUGUS – For the first time in more than a decade, Saugus homeowners and businesses won’t see an increase in their sewer rates. Selectmen voted unanimously on Tuesday (June 2), after receiving their annual sewer rate analysis from longtime consultant Matt Abrahams of The Abrahams Group, to vote for a zero percent increase in sewer rates for the 2027 Fiscal Year that begins July 1.

Some board members were concerned about the possibility of residential and commercial users having to pay higher bills anyway because of the ongoing installation of new water meters – which are expected to provide more accurate and higher usage readings than the old meters that are going to be replaced. Uncertainty over the exact impact of the new water meters on future water and sewer bills – coupled with the town having accrued adequate retained earnings in its sewer budget to go a year without an increase – influenced the selectmen’s decision.

“We’re getting an increase because the [new] meters are more accurate. Don’t give us another bump,” one resident pleaded before selectmen took their vote.

In an interview after the meeting, Board of Selectmen Chair Debra Panetta said that while she and other members were agreeable to approving the lowest possible sewer rate hike, she’s convinced that selectmen agreed on the best option, given the circumstances. “We have a healthy situation in retained earnings. At least we can fall back on that. If we didn’t have that, there’s no way we’d vote for the zero percent increase,” Panetta told The Saugus Advocate.

“Based on the information that was presented to us, we tried to be thoughtful and prudent while also looking out for the residents,” she said.

It remains to be seen whether recent resident concerns expressed about the accuracy of water bills and the uncertainty of how the new meters will affect future bills has any bearing on the upcoming Town Meeting vote on whether to increase water rates. The Finance Committee was scheduled to meet Wednesday night, which was after the deadline for The Saugus Advocate.

Depending on the action taken by the Finance Committee in recommending a handful of articles (including the town and School Department budgets), Town Meeting could reconvene as early as next Monday night (June 8) for what could be the fourth and final session of this year’s Annual Town Meeting. The remaining five articles include consideration of a possible water rate increase.

During selectmen’s afternoon session on Tuesday, Abrahams presented three options for selectmen to consider:

• A 6 percent increase in the sewer rate, which would result in a $239 bill twice a year for the average residential user – a $28 increase. The average commercial user would pay a bill of $2,220 twice a year – a $252 increase.
• A 5 percent increase in the sewer rate, which would result in a $237 bill twice a year for the average residential user – a $22 increase. The average commercial user would pay a bill of $2,199 twice a year – a $210 increase.
• A 4 percent increase in the sewer rate, which would result in a $235 bill twice a year for the average residential user – an $18 increase. The average commercial user would pay a bill of $2,178 twice a year – a $168 increase.

Board of Selectmen Vice Chair Anthony Cogliano said he opposed any increase in the sewer bill because of his concerns about the accuracy of water meter readings, particularly on properties he owns. “I have four homes in Saugus. One has 17 people living in it. That’s a four family house with 17 people. The bill was $1,200,” Cogliano said of a recent water bill.

“I have another three family home with nine people living in it. You combine those two houses, the bill was $3,100 between the two houses. I have two houses with five people in one and four in another, and the bill was $7,200. I’m not voting for anything until I figure out what’s going on with these bills. That’s just it. I’m not doing it,” he said. Cogliano also mentioned the abatements that 15 residents had filed for on their water bills.

Selectman Frank Federico initially said he was not ready to vote for any increase after receiving his package of information on Abrahams’ analysis on short notice. Later, he told colleagues that he had received feedback from residents urging him to vote against any increase.

Selectman Jeff Cicolini was prepared to vote for an increase, until Cogliano and Federico expressed their opposition to voting for a rate increase. “I don’t feel comfortable if we’re going to have two members who feel like zero percent is appropriate. That puts us in a tough spot as a group, as a board,” Cicolini said.

“And I understand, and I’m not saying who’s right and who’s wrong. But the operating costs are the operating costs. Do we have the retained earnings to absorb it for one year? Yes,” he said.

If selectmen didn’t vote to increase the sewer rates, they would have to use $1.2 million from the retained earnings to balance the budget, Abrahams told selectmen.

“We’re budgeted to use $1.2 million, but it’s really $600,000,” Cicolini said, noting that the town never used the $600,000 in retained earnings this year.

Cicolini pointed out that the 2021 Fiscal Year was the last time the town’s sewer budget ran at a deficit. “A lot of our retained earnings have accumulated over the last five years,” he said.

Town Manager Scott C. Crabtree urged selectmen to carefully consider and understand the potential consequences in making their decision. “When you go with a zero, it’s very difficult to make up that zero,” he said.

Crabtree recalled that the sewer budget had constantly run at a deficit before his administration took over. “I think we’ve done a good job stabilizing these accounts,” he said.

Selectman Michael Serino said he thought it was a wise decision for selectmen to wait and see the amount of money the new meters would bring in. And based on that information, selectmen would be in a better position to decide future rate increases.

About 7,900 out of 9,600 of Saugus property owners have had their new meters installed so far, according to Wendy Hatch, the town’s Finance Director and Treasurer/Collector.

“I thought the board did the right thing – the proper thing,” Cogliano said in an interview Tuesday night.

“The projections are that the new meters are going to be more accurate and a lot of people are going to see an increase in their bills,” he said.

Cicolini said he stands by the board’s decision. “Fortunately, we generated some healthy retained earnings that allowed us to do this, and we still have a healthy balance,” Cicolini said.

But next year, which will be a town election year, selectmen could be forced to make an unpopular decision of increasing the rate to make up for this year, he said. “The rising costs are scary,” Cicolini said.

He noted that the Lynn Water & Sewer Commission assessment increased by 33 percent in the current fiscal year above the budgeted amount, due to larger than expected operating increases. More commission increases are expected in the new fiscal year.

“I’m glad we voted ‘Zero’ on the sewer rate increase,” Federico said.

“That being said, I don’t want to see Saugus with financial issues next year,” he said.