SOUTHWICK — It’s a warning that Public Works Director Randy Brown provides the Select Board every summer: sewer user fees are not keeping up with the amount of money needed for the town to operate its sewer system which is forcing the town to rely on all its taxpayers to subsidize its operation.
“I would say this is probably the most pressing issue in public works right now; forget all the potholes and road conditions, this is something that needs to be addressed,” Brown said during the board’s July 22 meeting. “We have a very large gap in projected revenues for the next couple of years and it’s going to come to a head very soon,” Brown said.
Brown made the presentation in advance of the board deciding how much the user rate will need to be increased this year. The increase needs to be decided before Oct. 1.
The town’s general budget, largely funded by property taxes paid by every landowner in town, kicks in about 17% of the revenues needed to operate the sewer system. For five years, the town’s subsidy to the Sewer Department has remained around $225,000.
While Brown didn’t suggest how much to increase the sewer rate, he said to eliminate the need for an annual subsidy from the town’s general fund, borne by every taxpayer, sewer customer rates would need to increase by 85%.
The town now has a tiered billing system based on usage. For those who use up to 15,000 gallons annually, an 85% hike would grow the rate of $11.75 per thousand gallons to $18.73 per thousand gallons.
Customers who use between 15,000 to 30,000 gallons annually would see their rate of $14.91 per thousand gallons jump to $26.58 per thousand gallons. Those using 30,000 gallons or more annually would see their rate of $15.44 per thousand gallons increase to $28.56 per thousand gallons.
An 85% increase in the senior citizen rate of $11.25 per thousand gallons would result in a new rate of $20.81 per thousand gallons.
Moglin said a hike of 85% would result in “ridiculous” increases in user bills. He added that he didn’t think eliminating the subsidy could happen “anytime soon.”
Brown said rates will likely have to rise, anyway. Even if the $225,000 general fund subsidy stayed in place, he said, to balance sewer budget would still require rate hikes of 45%.
That sort of rate hike would result in rates of $17.03 per thousand gallons for customers using up to 15,000 gallons annually; $21.61 for customers in the middle tier; and $16.31 in the top tier of 30,000 gallons or more per year.
There are two other significant factors that might contribute to a significant rate increase: retained earnings and betterment fees. The Sewer Division’s retained earnings are typically used for capital projects. However, Brown has been using retained earnings between $384,000 and $200,000 over the past five years to balance the budget.
“Retained earning cannot be relied upon to balance the budget,” Brown said.
Betterment payments, which are loans and principal incurred by the customers who connected to the system, are starting to dry up, Brown said. In fiscal year 2016, betterment revenue was $338,733 and is projected to drop to less than $200,000 in FY25, he said.
Board member Diane Gale suggested approaching Westfield about renegotiating the intermunicipal agreement the town and city signed last year. The agreement set the rate the town pays Westfield for processing its sewage at $7.39 per thousand gallons for FY25, and that will increase 8% per year over the next three years. Rates for FY26 and FY27 have yet to be set by the city.
Brown, responding to Gale, said Westfield is currently charging Southwick its rate for commercial customers, and is not likely to reduce the rate.
Board member Doug Moglin recounted a conversation he had least year with Westfield Mayor Michael McCabe about the rate. Moglin said McCabe became visibly upset.
“We can have a discussion, but it would be pointless,” Moglin said.
The only way sewer customers might see their bills stabilize is if more residents connected to the system, and Brown estimates that between 800 and 1,000 new connections would be needed to keep rates at current levels.
More customers allows the fixed costs of the system to be spread out among more households, decreasing the need for rate increases, Moglin said. But that’s unlikely to happen.
Moglin reminded the board that expanding the system has been tried before, unsuccessfully. He recalled a project several years ago in which Town Meeting approved $600,000 for its design, but a subsequent Town Meeting voted not to build the extension.
Because it was a townwide vote to build the sewer system — which primarily serves the town’s commercial center, the Congamond Lake area and the school campus — the town’s taxpayers are still on the hook, Gale said.
“It can’t all be on the users. The rest of the town doesn’t want sewers, but they still have to pay. It’s going to have to stay in the subsidy,” she said.
Brown and the board said they would have talks with the town’s Finance Committee to learn if they might be willing to increase the subsidy to offset the expected rate increase.
