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Water and sewer charges have been shooting up nine per cent a year with barely a whimper of protest from city councillors or the public. Today, two city councillors will reveal that the bureaucrats have been using some accounting that is almost Enron-like to load tens of millions of dollars in unjustified costs on to your water and sewer bill.
The city is billing water and sewer users a stunning 33 per cent for administrative charges. Compare that to the city’s overall administration cost of seven per cent of the budget. Either the administration of the water and sewer programs is the most costly and inept imaginable or the city is using the little-examined user charges as a way to bury its other administrative costs and artificially keep the tax rate down.
The administrative fees the city charges the two funds are not only inexplicably high, they defy logic. The water portion pays a 25.8-per-cent administrative cost, while the sewer part pays a much higher 38.8 per cent. How can it possibly cost $25.9 million to administer a sewer system?
Councillor Peter Hume caught on to the situation when he looked into making the water and sewer operations a separate utility. He was told there was one big problem. The charges people are paying are way out of line with the actual money spent on water and sewer service.
That’s not a fact apparent to anyone examining the city budget, Hume says, where the huge administrative charges are mentioned in a single line under the finance department section.
The total administrative charge for the two is $40.7 million a year. That’s roughly $30 million more than might be reasonable. Honest accounting would reduce your water and sewer bill by about 25 per cent. The problem is, correcting the administrative overcharge doesn’t make the cost go away. It would add about $30 million back to the tax side. That’s a tax increase of about 3.5 per cent, a nightmare for candidates promising to freeze or restrain taxes.
Despite that, Hume believes it’s time for honest accounting at City Hall. “It’s a dirty little secret and it’s time to end it,” he says.
“It’s no wonder people think they’re paying too much,” Councillor Jan Harder says.
Not only is the public paying too much for water and sewer, the two councillors say, the service is poor. It can take from nine months to a year for city staff to review a homeowner’s sewer to determine the cause of backups. If the homeowner has paid to fix the problem, but it’s determined to be the city’s fault, it can take up to a year to get reimbursement.
Even after the thorough hosing of water and sewer users, the city doesn’t stop. It charges $56 to set up a new water and sewer account. The money goes to the city, not the water and sewer fund. The councillors note that city-owned Hydro Ottawa, a for profit company, charges only $30. The city also charges $28 for account histories and $33 if you change your name.
This is the same city administration that tried to buffalo the public in this year’s budget by pretending the new garbage bill shouldn’t be counted as part of the tax total. After the media called their bluff, councillors ordered a proper accounting.
City manager Kent Kirkpatrick admits the the administrative fees charged to our water and sewer accounts are too high and says the whole thing will be reviewed as part of the 2007 budget. The practice goes back for years, Kirkpatrick says, and it’s difficult to identify just when the overcharging began.
Burying general city administrative charges in the water bill doesn’t cost you any more money in the end, but it’s an issue of honesty and integrity.
“When I pay my water bill, I expect it to be for my water service,” Hume says. Exactly.
City staff have repeatedly assured councillors that the water and sewer fees are simply a user-pay charge that covers real costs. It was enough to persuade councillors to boost the rates by nine per cent a year for four years without asking too many questions. We’re now in year two of the rapid increases. The average homeowner pays $713 a year for water and sewer.
The unjustified administrative charges have made Hume more determined to pursue his separate utility plan. Hume foresees a utility board comprised of councillors and ratepayers. The new entity could purchase only the administrative services it required, either from the city for from the private sector.
It’s a good idea, but we should set aside some money for an independent audit of the real administrative charges. City staff will come up with new, lower figures next year, but how do we know if the numbers are justified?
Contact Randall Denley at 596-3756 or by e-mail, rdenley@thecitizen.canwest.com
© The Ottawa Citizen 2006