By John Coffman
The Metropolitan Sewer District of St. Louis (MSD) is considering a dramatic wastewater rate increase–64.4% over four years for the average residential consumer. Unfortunately, the public has not been well informed about the size and extent of the proposed increase. What is worse is the fact that the same sewer improvement projects could be funded with a rate increase less than half this size–a 25.6% increase over the same period, provided MSD trusted the voters to approve public debt financing.
Unfortunately, even the local press is missing the main issue. No one is seriously debating the need for MSD’s proposed construction plan or its proposed operations and maintenance for the next few years. Sewer upgrades are desperately needed to comply with Environmental Protection Agency (EPA)standards.
The real issue boils down to how these projects should be financed. MSD has inexplicably shifted its position and is now proposing that its projects be totally funded by “Pay-Go”, instead of asking the voters to approve the issuance of bonds for 50% of the financing. The rate differential between these financing approaches is HUGE–an increase of $14.41/month, as opposed to $5.74/month.
So what is the reason that MSD is not interested in asking the voters to approve public debt financing? It is the industry standard for any sewer utility of this size. A financing mix that includes public debt would allow all of the current improvements to be made, while equitably spreading the cost out over the life of the improvments. Its debt coverage is more than sufficient to handle it.
Its staff used to support the idea. The EPA itself recommends some public debt financing for the proposed projects. Groups, representing consumers both large and small, have been urging a reconsideration of the current financing proposal. Several large industrial customers have been advocating that MSD use some form of public debt financing for months. AARP and other organizations agree and have now joined the debate in earnest. Why doesn’t MSD seem to be listening?
The only objection seems to be political in nature. But why wouldn’t the public approve bond financing, provided they were told how much it could save everyone in their sewer bill? And won’t it be harder to secure public support after ratepayers have been hit with an unexpected 64% increase that really only needed to be half that large?
It seems that the only solution at this stage is a political response. Concerned citizens may contact MSD’s Board of Trustees, as well as Mayor Slay and St. Louis County Executive Dooley. The MSD Board will vote on the current proposal at its Thursday November 8 meeting at 5:00pm.
