Fredericton city councillors say there could soon be a rate increase to residents’ water bills.
A staff report on the city’s long-term financial water and sewer plan was presented at a committee-in-council meeting this week.
Councillor Gregory Ericson said budget season kicked off Monday with a conversation about water and sewer rates and a five-year strategic plan to address the problems in the system and the proposed solutions that staff brought forward.
“Staff presented us with a report card where our current system failed on half of the measures that they judge the system’s financial stability on,” Ericson said. “They said that the revenues that are supporting the system are not aligned…with the expenses so it’s operating an annual structural deficit of about $3 million and it also has a tremendous backlog of infrastructure that needs to be replaced and that is about $140 million.”
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Ericson said both items need to be addressed if the water system is going to continue to operate in a safe and secure way for future generations.
According to recommendations in the report, rate increases should be applied to the fixed portion of the quarterly bill to address the imbalance between fixed and variable revenue and costs.
Ericson said four per cent rate increases will be applied for the next five years.
“The water bill you get quarterly in the city is divided into two parts — there’s a variable rate that changes on how much water you consume, and then there’s a fixed portion that’s to reflect your water metre rental, and the cost of the pipes in the ground that are required to deliver the water to you,” Ericson said.
Ericson said only 20 per cent of the cost to deliver water is relative to the variable rate. He said the other 80 per cent has to do with pipes in the ground, and water and sewer treatment.
“Overall, we’re looking at a four per cent increase and then a realignment of how much of your bill is based on the variable portion — your conservation effort, and then how much is based on the fixed portion which is the actual infrastructure cost of the system,” Ericson said.
Ericson said councillors asked questions about how the increase would impact residential customers compared to commercial customers. Those details will be brought forward at the city’s October 23 meeting.
Two councillors opposed to rate increase
City councillor Kevin Darrah said he is one of two councillors who voted against the increase.
Darrah said he has concerns regarding people not being able to afford the increase, how it could impact large families like Syrian newcomers and fixed-income seniors.
“The reason that I’m opposed, on top of the people not being able to afford it, is the federal government with their tax increase, the taxation of small businesses, the provincial government with pulling back on the property tax, it’s just been tax after tax after for Frederictonians,” Darrah said.
He agrees the infrastructure improvements are important to get done so they’re not pushing it back on the next generation, but said he doesn’t think it’s something that needs to be rushed through this year and said Fredericton taxpayers deserve a tax break.
“I think that maybe as a municipality we should maybe look at holding off, seeing if there’s another option and maybe a lower rate would be a better option,” Darrah said.
“Environmentally a lot of people have been positioning themselves to conserve water, and that’s good but at the same time that’s changed the way money has come in to pay for water and sewer so the rate increase would be to cover that lost cost,” Darrah said.
“It’s a tough decision to make. I understand why staff are pushing it forward. I understand why people are voting for the rate change because we don’t want to be in that position, but right now just with all the tax increases and the tax burdens we’ve been having, I just think that this year let’s, we should just leave it for one year, I don’t think that will make a big change.”
Non-profit group concerned
Fredericton Homeless Shelter Inc. executive director Warren Maddox said he’s concerned about the proposed increase.
Maddox said the rate increase is concerning from a not-for-profit and business perspective. He said the rate increase would increase the cost of running three shelters, and impact people moving out of shelters and into their own places.
“For people on social assistance, they’re living on $500 to $575 dollars a month, so their costs go up but there’s no increase in terms of the support we’re getting from government so it’s always a challenge,” Maddox said.
He said he also thinks other businesses like hotels will be impacted by the increase.
“It’s a little disappointing to sort of see yet another cost that’s going up. The power rates are going up, worker compensation is going up, next year probably property taxes will go up again, so we’re getting squeezed in a lot of areas and the revenue streams are getting harder and harder to come by,” Maddox said.
Ericson told Global News the city may take a look at a way to find relief for rooming houses and people trying to get themselves back on their feet.
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