Dollar Amounts for Water and Wastewater STM Warrant Articles Adjusted Downward
Over $150K in Deliquent Water and Wastewater Payments Owed to Town
At the Monday, October 18 meeting of the Winchendon Board of Selectmen, the Board and Town Manager Justin Sultzbach discussed proposed Warrant articles for the upcoming Fall Special Town Meeting, scheduled to convene on November 8. Once again, they confronted the ongoing topic of the Water and Wastewater Enterprise Funds losing significant amounts of money despite current water and sewer user rates having been raised the last two years in a row for a combined increase of over 40 percent, and how to move forward with four articles in the Warrant--Articles 5, 6, 7 and 8--as the town Enterprise Funds are facing current and future projected deficits.
Thoughts ran the gamut, ranging from, the financial shortfalls and losses should be covered exclusively by the town water and sewer users, to, we as a town are responsible for this as the water also serves town-owned departments and buildings. Selectman Barbara Anderson made her thoughts clear, saying, "I have now asked three town managers for a rate study in the last two years regarding the rates charged and I haven't gotten or seen one yet." Selectman Rick Ward explained, "We previously used retained funds that were supposed to be used for infrastructure to help support these enterprise funds, we used those all up, and now we are proposing to use Free Cash. I understand we have to approve Articles 5 and 6 because we have to get the budget straight, but these are Enterprise Funds, they are supposed to be self sustaining and funded by user fees."
Articles 5 and 6 concern state-mandated payment by the town to cover FY2021 operating deficits with transfers from Free Cash, which for the Water Department are $81,562.65, and the Wastewater Department, $154,131.98.
Former Town Manager Keith Hickey was the first to be asked about the rates by Anderson during his roughly three and a half years of employment by the town, followed by Interim Town Manager Steve Delaney who was only in the position during a six-month transition period. Now current Town Manager Justin Sultzbach, who took over the position this past May 17 at Winchendon's Annual Town Meeting, is tasked with doing what no Town Manager has done going back at least ten years (going back to the tenure of former Town Manager James Kriedler): come up with a comprehensive long term capital plan on how to "fix both the physical and financial leaks" which have been a burden on the systems. Sultzbach did point out, "To Hickey's credit, he heavily focused on getting several million borrowed from the state to balance the town budget paid off very early, so he did have important work to do. You can only come up with so much money at a time."
At a recent meeting of the BOS within the last few months, both Ms. Anderson and Selectman Danielle LaPointe commented that they strongly felt, due to the COVID pandemic and associated economic shutdowns, that no town water customers should have their service shut off for non-payment, as many had suffered hardships and financial difficulties. As the town has not been shutting people off, the amount of debt and unpaid delinquent monies which are necessary to keep both the Water and Sewer Enterprise funds functioning has skyrocketed. As the town has roughly 1,100 customers, according to former Department of Public Works Superintendent Albert Gallant in 2018, the Courier requested the current amount of unpaid bills owed to the Water and Wastewater Enterprise Funds. While the number of customers delinquent was not available as time of this story, the total amount currently owed combined is staggering. Town Manager Justin Sultzbach per request on Thursday, October 21, confirmed, "Unpaid bills owed due to the town for both funds combined dating back one year to current day equal $150,596,92."
Additionally, as the town had experienced a period of some five consecutive years without an increase in either the water or wastewater rates, the rates were increased over a combined 20 percent in FY21, and then another 20 percent on top of that in FY22 to try to balance the budget shortfalls for an actual over 40 percent vs FY20, as water rates went up 6.82% in FY2021, and waste water rates went up 14.28%. Following this, Sultzbach confirmed both rates then again went up the same percentages for FY2022.
However, with over $150K in delinquent user debt, and a documented 28 percent total water loss combined throughout the entire system, the Enterprise Funds are neither self-sustaining or viable moving forward under current conditions. Added to this, the town confirms that many home water meters are either barely functioning or not functioning properly in measuring water usage, and there has not been and continues to be no capital plan in place for maintenance or repairs, compounding the problem even further.
Articles 7 and 8 on the STM Warrant address projected FY2022 Water and Wastewater Enterprise Fund losses based off fiscal revenue realized in FY2021. Sultzbach said, "These are numbers we have gotten from working with the state, but we now have new numbers we are going to propose at Town Meeting on the floor which are less."
As published and certified in the STM Warrant, Article 7 reads, "To see if the Town will vote to raise or transfer from available funds the addition sum of $114,406 to fund the additional revenue shortfall of the Water Budget voted under Article 7 of the May 17, 2021 Annual Town Meeting, and to decrease the FY2022 Water Budget $70,000 from $1,113,978 to $1,043,978, or act in relation thereto."
Article 8 reads, "To see if the Town will vote to raise and appropriate or transfer from available funds the additional sum of $199,217 to fund the anticipated revenue shortfall of the Wastewater Budget voted under Article 8 of the May 17, 2021 Annual Town Meeting, and to decrease the FY2022 Wastewater Budget $100,000 from $1,512,166 to $1,412,166 or act in relation thereto."
Regarding both articles, members of the BOS voted recommending each by a 3-2 vote, while members of the Finance Committee voted NOT to recommend by a 6-0 vote. Because of this, Sultzbach realized he needed to continue working hard on a new plan.
Sultzbach wants the public to know, "This should have been addressed before the last Annual Town Meeting in May prior to my time with the town. There was enough data from Fiscal 21 providing us with enough numbers to know what they should have just about been for Fiscal 22. We have been working with the state to figure out what is realistically the lowest amount we can put in to the budgets to make them work for this year, with the understanding that more than likely even with this change, there is probably still going to be a deficit. It's not going to be huge, but this will at least take a little bit of the sting out of it and make the budgets be more realistically balanced.
"The state came in and told us we must adjust our numbers, and gave us three options to go about fixing it. The first is to adjust our fiscal year 2022 budget which we are currently in. The second is to raise and or appropriate Free Cash which in this instance is to cover the projected deficit, and the third and less desirable is to take no action, and then the state would come in and force a subsidy on us which means it would get transferred on to our tax bills," Sultzbach explained.
Due to higher revenue from collections, as the rates again went up this past March, Article 7's request will be reduced from $114,406 to $51,664.02 to supplement the budget which also calls for a $70,000 spending reduction if approved by voters. The Article 8 request will be reduced from a conservatively high $199,217 to $26,127 along with decreasing the budget by $100,000. Sultzbach said, "I really, really do not like to have to cut these budgets because this operating money is for repairs, replacement, and upkeep. This town has traditionally kicked the can down the road, and we can't do that anymore. However this will get us by if voted at Town Meeting, so I can then institute a new five point plan designed to move the town forward, and work toward preventing this from happening again. I am a proactive person, and given the data we now have, this is reactionary. Again, I don't like this, but at this time in my opinion it's what must be done to get us where the town needs to be."
Sultzbach explained his five point plan as the following. "First the Town of Winchendon absolutely needs to institute a Capital Plan for both the Water and Wastewater Enterprise Fund Departments for all future repairs, replacements, and items not yet discovered.
"Secondly, which is currently already ongoing, a full pipe survey of all water lines in town to find out where all the leaks are, and which ones need to be addressed first based on a case by case find and basis.
"Third, address infiltration and inflow, where storm water is getting in to the town sewer pipes, or if people are illegally tying their sump pumps into their sewer pipes which also costs the town more money, we need to find these occurrences and put a stop to them.
"The fourth is replacing all water meters in homes which are not working properly to get an accurate reading so we are charging customers properly.
"Lastly, a water rate study. The water rate wasn't touched for years while expenses went up every year. We need an effective rate study to get an effective and fair rate implemented moving forward and we can't get one properly instituted without the proper data which all comes from parts one through four above."
In closing Sultzbach said, "What we need is for the public to support these articles as changed which we will explain at the Annual Town Meeting in November on town [meeting] floor, but what is important is it's not for me to ask, it's for the Board of Selectman to ask. What I will say is this is a long term problem, and we are looking to put in place a long term solution. The day of doing quick fixes is over, we absolutely need to address this."
FinCom Votes Not to Recommend STM Articles Addressing Water and Wastewater Enterprise Fund Deficits
In their meeting on October 12, the Winchendon Finance Committee voted unanimously, 6-0, not to recommend Warrant Articles 7 and 8, which request that funds be appropriated from Free Cash to cover anticipated deficits in the Water and Wastewater Enterprise Funds, respectively, for Fiscal Year 2022, which ends June 30, 2022. In their lengthy discussion, no mention was made of the rate increases charged to water and sewer users for the past two years.
(For previous Courier coverage of the water and wastewater budget shortfalls and rate increases, see:
"Consulting Firm Addresses Growing Deficits in Water and Sewer Budgets" in the June 25-July 2 2020 edition of The Winchendon Courier along with Water and Sewer Rate Study Recommends Rate Increases on the town website, with links to the rate study and PowerPoint presentation by Wright Pierce Environmental Services;
"Board of Selectmen Approve Water and Sewer Rate Increases for FY2022" in the March 25-April 1 2021 edition of The Winchendon Courier;
"Town Accountant Updates BOS: Water/Sewer Hemorrhaging Dollars and Gallons" in the August 12-19 2021 edition of The Winchendon Courier)
Finance Committee Chair Thomas Kane began the discussion with a detailed summary of the issues behind the four articles dealing with FY21 and FY22 shortfalls in the funds. "We could see this coming at the end of year last year. I remember we noted that there was a shortfall in user payments of, I don't remember what it was, one hundred thirty-forty thousand dollars. There was some savings in expenses that offset it to some extent, then this eighty thousand dollar gap was there...My first thought, I remember asking this question back in July, was it because people were not paying their water bills, because of financial hardships due to COVID. But I was told that actually the collection rate is very good right now with the water and the sewer bills."
Mr. Kane went on to talk about the possibility that the meters were inaccurate, and the fact that there is considerable known leakage from the pipes throughout the system. He pointed out that Enterprise Funds, by their nature and definition, are intended to be self-sustaining and balanced, but Winchendon has been carrying over excess retained earnings from previous years to cover an increasing shortfall each year, and now this has run out.
"But we haven't taken the obvious step, it seems to me, to deal with it," Mr. Kane said. "There may be fixes to improve recordings of the amount of cubic feet that go into the homes, and make that more accurate, and leaks that we can fix. But it would look as though we were subsidizing the rates with retained earnings for years, and we're reluctant to raise the rates, I don't understand why we would be reluctant to increase our rates."
Town Manager Justin Sultzbach responded "And I think it's an important question to ask and an important discussion to have as a community. I think you touched on a lot of important points there, it's very much a multi-faceted issue. I think the reason any time this conversation comes up, the first things you hear about is the rates, is because the rates are so [important] a component, and it's something that needs to be reviewed." He added, "Another issue is long-standing capital issues that have, frankly, not been addressed for ten or twenty years. The water meters is an excellent example of there, where our then-new DPW Director attempted to take the initiative to replave water meters so that we could more accurately track how much water was being utilized by residents and unfortunately that was voted down on Town [Meeting] floor."
Mr. Sultzbach went on to talk about issues with the aging pipes and facilities, and the possibility of using American Rescue Plan Act (ARPA) funding to help pay for repairs and upgrades.
FinCom member Dr. Maureen Ward said, "You've addressed the aging and the failure to keep up, but you haven't addressed that this town has failed to increase the water rates for years. When I look at [Articles] 7 and 8, you're asking us to pay forward for what you anticipate as a loss without increasing the rates to try and mitigate some of that. So you're asking people that don't have wastewater, and don't have town water, to pay for those that have used it. I do have a problem with that. Because if we're using the water, increase our rates, so that we are self-sufficient, it's an Enterprise fund, it's supposed to be a wash. It's not supposed to cost us more. So if we're not doing our job by keeping our rates in line with our needs, that's our fault."
In response to questions by new FinCom member Adrian Guerrero, Department of Public Works Director Brian Croteau and Mr. Sultzbach explained that most repairs to broken pipes were handled in-house, if they were emergency situations, contracted out if they were large jobs, or handled by the private company running the two facilities, if the issues were at the plants.
Mr. Kane said, "We all know that we have overestimated the amount of money that we'd collect from users, consistently comes up short, never addressed it through increases in the rates. Nobody wants to pay three dollars a gallon for gas, but that's the price of gas. There aren't any gas stations surrounding us, oh, that's awfully high, I think we'll just charge two fifty. But that's what we do in this town with the water and sewer rates. We don't want to increase the rates, so we take a deficit. It's an Enterprise fund. It's got to operate on a break-even basis. And refusing to increase rates and going to the town's Free Cash is just no way to answer. We can't undo what we did last year, but I don't see why we should continue this by taking Free Cash now for a deficit that we won't know what the total is until July first."
When the FinCom voted on their recommendations, Dr. Ward made the motions not to approve Article 7 and Article 8. Both motions to not recommend passed unanimously, 6-0.
At the 2019 Fall Special Town Meeting, voters approved borrowing $1 million from the Water and Wastewater Enterprise funds--$550,000 from Water and $450,000 from Wastewater--to cover costs of replacing the water and sewer mains during the Central Street Reconstruction Project. This has not been mentioned in subsequent discussions of the Water and Wastewater Enterprise Funds. (See "Winchendon voters defeat article for expanded fire station," vote on Warrant Article 3, in the October 31-November 7 2019 edition of The Winchendon Courier.)
Winchendon COVID Viral Levels Drop to Lowest in Four Weeks, Still Far from Target
With the newest data available released by the Massachusetts Department of Public Health as of Thursday, October 21, the Town of Winchendon, while far from good, has realized its lowest positivity rate since September 30 at 5.07 percent based on 927 molecular tests. Beginning several weeks ago, Winchendon had seen concerning increases in viral positivity as a municipality registering at 5.09 percent on September 30, jumping to 5.64 percent October 7, followed by a then virtual parallel of 5.54 percent on October 14, and now dropping a welcome nearly half a percentage point to 5.07 percent.
Locally, many towns are still considered very high as the area of North Central Massachusetts as well as nearby bordering towns of North Middlesex County are still identified by the Massachusetts DPH as "Regional Clusters" of concern.
In Winchendon's immediate bordering community area school districts, both the Narragansett Regional School District, and Oakmont Regional School District realize the highest community numbers of any district around, with the NRSD towns of Templeton and Phillipston currently possessing extremely high two week average numbers. Templeton which is currently rated at a viral positivity rate of 6.44 percent, up slightly from 6.41 a week ago, is dwarfed by school district member the Town of Phillipston, up from an already very high 11.80 a week ago, to a consistently alarming 12.86 percent, for a two week average of 12.33 percent, and a combined school district average of 9.65 percent. In the ORSD, member community Ashburnham to Winchendon's east, dropped from 3.42 to 2.96 percent, while fellow school district member Westminster, yet again realized another spike increasing from 5.44 percent a week ago, to a high 8.65 percent based on 740 molecular tests.
To Winchendon's west, the bordering Town of Royalston registers at 2.34 percent, up from 0.73 a week prior, a three fold increase however still low versus many area communities. Its fellow school district member, Town of Athol, a very high 8.39 percent just two weeks ago, has now dropped to 5.78 percent. Also bordering Winchendon, the City of Gardner registering a week prior at 5.44 percent, has dropped slightly to 5.06 percent based on 2,393 tests. Just two and three towns away in the Quabbin Regional School District, its two largest member towns of Hubbardston, registered at 6.27 percent, and Barre increasing from 6.75 to 7.30 percent also currently have high viral values over the last several weeks.
Massachusetts' largest cities continue to lead the way with some of the lowest numbers in the Commonwealth despite much larger populations and population density. City of Worcester which as of the 2020 census realizes a population of 206,518 still experiences a viral positivity level more than 4 times less than Winchendon at just 1.15 percent. The City of Springfield, which according to the 2020 census realizes a population of 156,000, is currently 3.18 percent, a positivity rate 38 percent less than Winchendon with just 10,765 DPH listed residents. Boston, Massachusetts' and New England's largest city, has come in at 0.80 percent, making it less than 1/6 as viral infected as Toy Town, despite having 69 times Toy Town's population density per square mile.
In closing, the FDA has now officially cleared the Pfizer vaccine for a booster shot in the 18-49 age group for people with underlying conditions, and is expected as soon as this week to possibly clear both the Moderna vaccine booster, and Johnson & Johnson vaccine booster. As a Commonwealth, 69 percent of Massachusetts' 6,900,000 residents are currently vaccinated, while Winchendon according to the Mass DPH and State Representative John Zlotnik is now just 49 percent vaccinated. As a nation, the USA is now 57.6 percent vaccinated, for 190 Million of its 330 Million residents. Winchendon was recently listed as 1 of the 10 worst vaccinated municipalities in the entire Commonwealth on an internet search.
Keith Kent
Chair
Board of Health
Town of Winchendon
To schedule a free COVID-19 vaccination at any time, go to www.mass.gov/covid-19-vaccine.
