Village poised to increase fees in effort to patch leaky water fund
Last updated 3/24/2021 at 2:43pm | View PDF
By Ken Knutson
Water usage in Hinsdale has been decreasing for a number of years, which means less revenue for the village to pay for needed and expensive system upgrades, projected to cost $3.1 million in the next four years.
At a March 16 joint committee of the whole meeting, trustees and members of the village’s finance commission discussed a two-pronged solution of raising the water and sewer rate and implementing a fixed infrastructure maintenance and improvement fee (IMIF) to provide a steady revenue stream.
Trustee Jerry Hughes said the village’s water utility has been operating at a loss, even after the last rate hike in 2015. He said more efficient use of the resource may be good globally but not necessarily for the village’s bottom line.
“Unfortunately, we’ve set ourselves up so that that creates significant negative economic, financial consequences for us,” said Hughes, noting that the village has been subsidizing the service, including for people outside the village using its water system. “We’re highly exposed on a year-to-year basis to fluctuations in consumption.”
Village manager Kathleen Gargano presented a proposal to increase the water rate 4 percent and institute a $14.50 fixed fee, estimated to provide an additional roughly $800,000 for the water fund to offset the average $706,000 annual water and sewer fund budget shortfall.
“If we took the 4-percent rate increase with a $14,50 IMIF fee, we feel that we should able to support the capital needs from now through 2025,” Gargano said. “We wanted to have an adjustment obviously be as small as possible. You can always adjust up from (4 percent), but we obviously don’t ever want to charge people more than we absolutely need.”
The proposal also recommends evaluating the water rate and IMIF fee as part of the annual budget process.
Finance commissioner Ed Tobia floated the idea of a bigger fixed fee, saying that makes more sense to him than raising the usage rate since the funds are needed for system upgrades that will benefit all users.
“The capital improvement fee should be probably a little higher than $14.50,” he said.
But Darrell Langlois, the recently retired village finance director who returned for this meeting, said that would disproportionately burden those that use less water.
“If somebody’s got a $30 water bill and their bill is going to go up $20 with the IMIF, that’s a lot bigger increase than somebody’s bill that’s $300 and goes up $20,” Langlois responded. “The higher the fixed cost, it does affect the lower users quite a bit more.”
The average village homeowner pays around $250 every other month. Gargano said residents on a fixed income could be eligible for a 50-percent discount on the fixed fee.
Hughes said the objective is to find the right financial formula.
“(We’re) trying to get to the point where we finish plugging the revenue gap,“ he said, adding that he believes the $14.50 fixed fee is too low. “I think it’s a mistake for us to tie the fixed charge to capital improvements. Because our fixed cost problem is bigger than that.”
Trustee Neale Byrnes indicated his support for the IMIF to shore up the balance sheet.
“That’s money you can really take to the bank,” he said.
The village board is expected to hold a first read on a water rate adjustment ordinance at its Tuesday, April 6 meeting.