Sewer rates will be going up again – but only about half as much as a year ago. Following their annual analysis, presentation and review of the town sewer rates on Wednesday night (May 4), selectmen voted 5-0 to increase the sewer rates by 4.5 percent for the 2023 fiscal year that begins July 1. Selectmen decided to go with the middle of three options – one that would have the average residential user paying an annual bill of about $398 a year, an average annual hike of $18.
Under the 4.5 percent increase, the average commercial user will be paying an annual bill of $3,674, an increase of $142.
Last year, selectmen approved an 8.25 percent increase for the 2022 fiscal year, a $29 annual increase for the average residential user.
“The Lynn Water and Sewer capital improvements are happening, just not happening as soon as we thought,” Consultant Matt Abrahams of the Abrahams Group told selectmen, explaining one of the reasons why this year’s increase was lower than last year. He also noted that 2021 was “a banner year in revenues.”
“We saw revenues way up,” Abrahams said.
Under the highest of the rate options, the average residential user would be paying a $400 annual bill – an increase of $20. Under the third option, the average residential user would be paying $396, an average annual hike of $16.
During Wednesday’s session in the first floor conference room, Abrams presented the board with a detailed report, which included these highlights from a review of the current fiscal year (2022):
- User charges revenue is up 12 percent over FY 2021’s, due to rate increase and large bills for heavy sewer users.
- Projected expenses up $200,000 (or 3 percent) over FY 2021’s.
- $740,000 in Retained Earnings used to balance the budget projections show $67,000 will be needed for the deficit.
- Four prior fiscal years operated with a deficit greater than $690,000.
Capital improvement projects planned
This year’s Abrahams Group report also noted a projected debt service of $1.73 million over the four year period FY 2024 to FY 2027. That money would fund these projects and items that are part of the town’s five-year capital plan:
- Sewer Rehabilitation Substation PS4 in FY 2023
- Lift Station Design and Improvement in FY 2024
- Water Meter Replacement Program in FY 2023
- Mini-excavator in FY 2024
- Replacement of Utility Truck in FY 2026
Meanwhile, the town could expect these notable impacts in the near future:
- Sizable anticipated increase in Lynn Water/Sewer assessment due to LWSC’s capital plan and borrowing of $40 million
- Impact of debt service related to capital plan significant over next few years
Town Manager Scott C. Crabtree noted that the town has come a long way to improve its fiscal situation related to the sewer system. Crabtree emphasized that when the town signed an Administrative Consent Order (ACO) back in 2005 to improve the sewer system, town consultants advised that the town needed to double its sewer rates within the first five years.
“But it really didn’t happen at the rate that it should have,” Crabtree said.
And the condition of the sewer system was so bad, “We were pumping raw sewage into the Saugus River at one point,” the town manager said. “In the past, when we were under an ACO, stormwater was going into our sewer system.”
A Retained Earnings goal of 10 percent
Crabtree is optimistic about the future as long as the town continues to stick with its capital improvement plan and continue its goal in trying to maintain 10 percent in Retained Earnings, “getting us somewhere back on track with reasonable rates.”
The Abrahams Group report noted that more than $3 million in total Retained Earnings was used to cover budget shortfalls in the Sewer Enterprise Fund over the last five fiscal years. Retained Earnings were certified at $1.67 million, as of July 1, 2021, and $67,000 of Retained Earnings is projected to be used to cover revenue shortfalls in the current fiscal year, according to the consultant’s report. Without a rate increase, Retained Earnings would be depleted by FY 2025, according to the Abrahams Group report.
Selectman Jeff Cicolini said he is willing to accept the 5 percent increase in sewer rates for FY 2023. “We just have to be mindful, we’re in an area of inflation,” Cicolini said.
“Gone are the days when we can get by for less,” he said.
The sewer bills are generated from water meters, the town manager noted, adding that 2006 was the last time that Saugus had water meters replaced. Replacing the existing meters with more modern ones will greatly improve the efficiency of the system, Crabtree noted. For one thing, meter readers won’t have to enter people’s homes to get a reading.
But even with improvements in technology, predicting and estimating revenues in water and sewer services will remain “very challenging,” according to Crabtree. “If we have a wet summer, people will use less water. The less water you use, the less revenue,” Crabtree said.
“If it’s dry, people use a lot more water,” he said.
And efforts by large users – like WIN Waste Innovations, operators of the former Wheelabrator trash-to-energy plant – to conserve water could also have a significant impact when it comes to setting rates, he said.