Baltimore officials say proposed sewer and water rate increases were unforeseen, driven by rising expenses and inflation. But city financial documents filed in February suggest a sewer rate hike was inevitable then — and only unveiled last week.
The city is proposing to hike sewer rates by 15% and water rates by 3% through the end of the budget year in June, with additional increases planned for the following years.
Mayor Brandon Scott, who had to fight through a difficult primary in May, won a second term last month and retook the oath of office Dec. 3, said Wednesday the election was not a factor in his decision to seek a rate increase this month.
“It had nothing, absolutely nothing, to do with the election,” Scott said. “When you think about the cost, when we talk about the chemicals, obviously inflation, which is impacting everybody, all of us at home ... we know that this is what’s driving us.”
In a presentation to the city’s spending board, Matthew Garbark, the city’s acting deputy director of public works, said the administration’s proposal to hike sewer and water rates for the remainder of the fiscal year was born out of escalating costs from two federal consent decrees, a growing number of projects needed to enhance the system and inflation.
“We didn’t really foresee what the steep increases would be, as well as the immediate expenses that need to happen at the plants,” Garbark said.
Scott echoed that surprise, saying at a news conference after the meeting that he admonished Department of Public Works officials for not telling him about the need.
“One of our first questions to the director and his team is, ‘Why didn’t you tell me about this sooner?’” Scott said. “As I said at the BOE [Board of Estimates] today, I asked. ‘Could we have done this in a different way? Smaller over time?’”
But Baltimore’s financial disclosures, required when a city borrows money, suggest city officials have known since at least February that a sewer rate increase would be necessary for the current fiscal year. Projections included in an update to an annual disclosure filed that month state that an 8% sewer rate increase was factored into anticipated revenues for the current budget year that began in July and in next year’s budget.
Rate increases were not revealed until last week, however, when the agenda for the Board of Estimates was circulated. On Wednesday, the board set a Jan. 22 public hearing on the hikes. The five-member board, effectively controlled by the mayor, will take public testimony before voting on whether to enact the increases.
In addition to immediate increases, the proposed rate schedule calls for further increases in the next two budget years, beginning in July. Water and sewer rates are set go up by 9% both years. Stormwater fees would increase by 3% each year.
Financial disclosures show revenues for Baltimore’s wastewater system have increased over the last five years but mounting operating costs have outpaced that growth. As a result, the cushion between revenue and the money owed toward the fund’s debt has narrowed significantly, hurting the fund’s bond rating. The rating for Baltimore’s sewer bonds was downgraded with a negative outlook in 2023. That same year, the rating for the city’s water bonds was also downgraded.
Since 2002, Baltimore has been under a consent decree from the federal government mandating the city make improvements to stop overflows from its sanitary sewer system. In 2023, the city entered into another consent decree for operations at its Back River and Patapsco wastewater treatment plants.
Council President Zeke Cohen, chairman of the city’s spending board, called the proposed increases concerning. He questioned whether Baltimore officials could have enacted slightly higher increases for the last three years when hikes were set at a more moderate 3% for water and stormwater and 3.5% for sewer. When officials introduced that plan, they touted the increases as the lowest since the 1990s.
Scott said his administration set more modest rates during that period in an effort to help residents during the pandemic.
“We wanted to make sure we weren’t overstressing our residents,” he said.
Cohen, who opened Wednesday’s meeting by saying he would govern under the assertion that City Council is a “co-equal branch” of government, acknowledged afterward that he was outnumbered on the proposed rate increase. In addition to Scott, two mayoral appointees sit on the board. Comptroller Bill Henry is also a member.
“There’s always an opportunity to push back on items that are unfavorable to the public,” Cohen said. “This is a very challenging moment to see this type of rate increase for the residents of Baltimore, and we are looking forward to that subsequent hearing.”
Baltimore Banner reporter Lee O. Sanderlin contributed to this report.
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