Town Meeting 2022

Finance Committee recommends a 6 percent increase in water rates, a $28 annual increase for average residential user

  The Finance Committee at Wednesday’s (May 4) meeting voted unanimously to recommend a 6 percent increase in the water rate for the 2023 Fiscal Year that begins July 1. Town Manager Scott C. Crabtree and Finance Committee Chair Kenneth DePatto made a point throughout the meeting to emphasize that it was a fiscal mistake for Town Meeting members to approve “a zero increase” back in December of 2020.

  “You pay now or pay later, and it’s more later,” Crabtree said, as he made reference to the Town Meeting members’ vote to reject the recommended 4 percent water rate hike.

  “We lost two years of revenues,” the town manager said.

  DePatto noted the zero vote had “a significant impact” on the revenues and said he hoped Town Meeting members will follow the Finance Committee’s recommendations this time, as they have in five of the past six fiscal years.

  Consultant Matt Abrahams of the Abrahams Group agreed that it would have been in the best interests for the Town Meeting if members would have approved the 4 percent increase back in 2020. “We think had that been voted, we’d be presenting a 3 percent increase right now,” Abrahams said.

  Town Meeting members voted 27-19 to defeat the recommendation for a 4 percent hike in the water rate, which would have seen the average residential user’s bill increase to $482 – a $9 increase twice a year. Most of the members who spoke in opposition to the increase were troubled by the Saugus citizens struggling to make ends meet since the outbreak of the Coronavirus.

  Town Meeting members approved a 2.5 percent increase in the water rates last year.

  The water rate is among several financial articles that are expected to be taken up Monday when the Annual Town Meeting convenes at 7:30 p.m. in the second floor auditorium at Saugus Town Hall.

  Under the 6 percent increase plan recommended by the Finance Committee, the average residential user would pay $504 a year, an increase of $28, in their annual water bill. The average commercial user would pay $4,476 a year, a $254 hike.

  In his annual review of the Water Enterprise Fund, Abrahams noted in his report the following impact for the current fiscal year (2022):

• The user charges revenue was consistent from FY 2021 to FY2022, impacted by rate change since outdoor water usage was down.
• The projected expenses were up $500,000 (or 7 percent) over FY 2021’s.
• $612,000 in Retained Earnings was used to balance the budget; projections show $333,000 will be needed for a deficit.

  Due to the $333,000 FY 2022 projected deficit, Retained Earnings are projected to decrease less than $1.3 million at year-end, according to the report. The report noted that rate action was “necessary to avoid depleting Retained Earnings and to avoid shortfalls.” Without a rate hike, Retained Earnings would be depleted by FY 2024, it predicted.

  Each year, the town focuses on a five-year rate plan with objectives to:

• Target a projected Retained Earnings balance of 10 to 15 percent of the operating budget.
• Eliminate shortfalls, which require Retained Earnings to balance the operating budget.
• Increase rates so revenues from rates cover expenditures.
• Fund a capital plan for infrastructure and equipment.

  Even with the 6 percent rate hike, $205,000 in Retained Earnings will have to be used to balance the budget.