The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions of The Excelsior Springs Standard.
There’s a challenge in Excelsior Springs in need of a solution. Our water, sewer and trash services are all losing money. Our city leaders have proposed only one option: raising rates. The good news is there are other potential solutions. However, some of our leaders seem to be showing a surprisingly strong resistance to considering them, which may be a bigger challenge.
Raising rates might seem like an easy solution. However, previous rate increases resulted in customers using less water, so it’s unclear whether rate increases alone would increase revenues sufficiently.
Further, raising rates alone wouldn’t address the costs of service. Some of our senior city employees have indicated there are no opportunities to cut water, sewer, or trash costs. However, our current rates are over 30% higher than those of a sampling of communities within 40 miles. The proposed rate increases would push our rates over 50% higher. The numbers make it hard to argue we’re delivering our water, sewer and trash services as economically as possible.
One alternative solution would be to look more broadly within our city’s budget for opportunities to help balance our water, sewer and trash funds. Several city leaders have said there’s virtually no money available in either the city’s general fund or capital improvements fund for our water or sewer infrastructure. However, our city’s budget tells a different story.
For example, from 2013-2017, city leaders were able to find $915,734 from the city’s general fund and $870,095 from the capital improvements fund for the golf course. During that time, the golf course was losing $144,915 per year. Ms. McGovern indicated the golf course is required to pay back the money borrowed from the general fund to cover the resulting shortfalls, but it doesn’t appear that’s happened.
In 2017, city leaders proposed and approved another $800,000 in capital improvements funds to build a new clubhouse and develop lots at the golf course. As costs ballooned from original projections, an additional $870,000 in capital improvements funds were diverted to the project. In total, over the past 7 years, we’ve spent $3,455,829 or $493,689 a year, of general funds and capital improvements funds on the golf course.
Some city leaders say the capital improvements fund isn’t intended to be used for water and sewer infrastructure. However, in each of the past 5 years, city leaders proposed and approved budgets including capital improvements funds for sewer projects. Our budgets just haven’t included as much money for the needs of the community, like our city’s infrastructure, as they have for non-necessities like our golf course.
The $493,689 of general fund and/or capital improvements fund money spent on the golf course each year could cover almost 60% of the additional $832,530 needed to support our utilities. Refocusing that portion of our city’s budget from the golf course to our water and sewer infrastructure could reduce a potential rate increase down to approximately 7%, from the proposed 17%, without impacting any other funds, services or projects.
Another possible solution could result from conducting a thorough cost-benefit analysis of transferring our water and/or sewer utilities to an investor-owned utility. Such utilities are regulated by the Missouri Public Service Commission, and proposed rate increases go through an 11-month justification process before being approved or denied by the Commission.
These utilities are able to spread costs over a broad base of users, share resources between locations and negotiate with vendors and contractors for the best construction and repair rates for utility infrastructure. They’re also large enough to have employees like regulatory specialists, dedicated to ensuring water quality standards are met and avoiding expensive fines and cost accountants, focused specifically on controlling expenses.
Some city leaders seem to have a strong opposition to even considering an investor-owned utility. One concern mentioned was the rate such a utility might charge. However, the largest investor-owned water utility in the state currently charges a maximum water rate approximately 30% lower than our proposed rate.
Another concern mentioned was the loss of local control for setting rates and establishing high-volume contracts with industry. However, the Commission places stringent controls on rate increases for investor-owned utilities. In contrast, when city councils set rates, the only potential recourse for citizens negatively impacted by rate increases is voting differently in future elections. Investor-owned utilities also operate in areas with significant industry presence, including St. Joseph and Joplin, and in high growth areas like Arnold, Platte County and St. Charles, and the utilities don’t seem to be hindering industry or growth there.
Transferring our water and/or sewer utilities to an investor-owned utility would be a significant change for our community. It could be short-sighted to pursue or to dismiss, such an option without conducting a thorough cost-benefit analysis. However, when virtually every other community nearby is delivering clean water more affordably, we should be willing to take a thorough, honest look at what the reasons are and at what we could do differently.
There are several potential solutions to our water, sewer and trash budget challenges. Unfortunately, some city leaders have shown an apparent reluctance to consider any option other than raising rates. However, there’s still an opportunity for our city council to consider other options, which could result in a more affordable solution for our citizens. That opportunity should be motivating enough for our city leaders to be focusing on proposing and considering alternative solutions, rather than attempting to dismiss them. Our city leaders would also be wise to recognize that passing the proposed rate increase without first completing a good-faith, in-depth review of all available options would be the most politically costly decision they could make.