One of the biggest areas of contention in the 2014-2015 budget discussions for the City of Amsterdam is a proposed water rate increase. This past week, I was able to talk with Controller Matt Agresta who helped me dig into the numbers to see how the new rates could potentially affect homeowners and businesses.
The first thing to understand is that the under the budget proposed by Mayor Ann Thane, the flat rate water fee for a single family home would only increase by $10.32 per year. So the impact on average residents within the city is minimal.
Where the controversy lies is in the increase in the metered rate. Most residences within the city do not have water meters, so they are unaffected by this change. But there are businesses within the city, as well as residences and businesses outside the city, such as in Town of Amsterdam on Route 30, which buy water from the city at the metered rate.
The metered rate for residents and businesses inside the city for 2013-2014 is currently set at $3.45/100 cubic feet of water. The rate for businesses and residents outside the city is always set at 50% higher, which comes in at $5.18.
Thane has said that she wants to raise the metered rate because residents are shouldering an unfair portion of the cost of water services. You can see why she says this if you calculate and compare what the effective rate residents are paying.
Numbers in the proposed budget show that if an average single family home is charged a flat rate of $367.84 per year for an average 7053 cubic feet of water, they are essentially paying $5.22/100 cubic feet of water. That’s 4% higher than the rate businesses on Route 30 pay.
The proposed rate increases fix this imbalance. Thane’s budget calls for the rate that residents and businesses outside the city pay to increase to $5.96. By comparison, the effective rate that flat rate users will pay will be $5.36.
However, the impact this rate increase will have on businesses on Route 30 shouldn’t be ignored. In addition to utilities revenue, businesses on Route 30 generate a significant amount of sales tax revenue for the city. Alderman Ron Barone expressed at last week’s budget review meeting that he feared the rate increase would stifle new development.
It’s difficult to tell whether this fear is warranted or not. I know that business owners favor predictable costs. A 15% rate increase is a big jump and could cause developers to think twice.
But according to Agresta, the new rate is still lower than average water rates in the region as calculated by a study done for the city by John McDonald Engineering. Agresta said that according to the study, the average “inside” water rate for the area is $5.39. Most municipalities, like Amsterdam, charge a set percentage higher for commercial users outside their borders.
I checked a couple of other municipality’s rates myself. Gloversville charges a rate if $3.06 inside the city, and $7.65 for users outside the city. The Town of Wilton charges a standard rate of $3.95, but charges $4.61 for businesses around Exit 15 on the Northway.
Comparing rates directly from one municipality to another can be somewhat like comparing apples to oranges. I can imagine that there are a multitude of different factors that go into setting prices for any given area. But I think the facts show that the proposed rate for customers outside the city is not outrageous, and city residents are getting a relatively good deal on water as well.
All in all, I believe city policy makers need to strike a balance in this situation. The financial relationship between the city and town has to be mutually beneficial or otherwise there is no point for either of us. “Regional thinking” does not mean city tax payers are required to fund growth in the surrounding towns while our own economy struggles. However, Amsterdam’s sources of revenue are limited and I think it’s certainly in our own interest to make sure our best customer does well. In my opinion, if the common council can find expenses to cut in order to reduce the rate increase a little, that might be a good thing. However we should not have to sacrifice just to appease certain officials in the Town of Amsterdam.
What do you think? Should city residents pay more per gallon of water than customers in the towns? Do you think the proposed rate increase will drive away businesses on Route 30? Leave your opinions in the comments section below!