The following is an update to Mayor Jim Boroff's monthly column about city issues.
Not all city taxpayers are sewer users. Not all sewer users are city taxpayers.
Therefore, sewer customers should pay for their own sewer use - including administrative expenses. Money from taxpayers should be used for city services and capital improvements - certainly not for funding sewer operations.
That was the advice given to us by consultants when we restructured our sewer rates three years ago to meet the Environmental Protection Agency's mandated sewer separation requirements. This same advice was substantiated by our own auditors, the state auditor's office and later by Jim Petro, the former eight-year auditor of state and four-year state attorney general, who personally discussed this issue with me at great length.
All expenses paid from sewer revenue must be strictly related to the operation of the system. By state law, we cannot use sewer revenue for anything else. With this "best practices" advice in mind, we restructured our revenue rates accordingly to accomplish the following and to satisfy the state recommendations:
1) Provide for the additional funding needed to complete our EPA-mandated 20-year comprehensive separation plan with a minimum of borrowing. Indeed, the new rate system, as implemented, will save us $12 million in additional interest expenses that would have been incurred otherwise.
2) Continue to operate the waste water plant at maximum efficiency. This includes major repairs and upgrades to the system.
3) Cover the daily operating expenses of the sewer department. This would include technician salaries, utility costs, chemicals and minor repairs to the building and vehicles.
4) Compensate for the time spent in the administration, planning, engineering and oversight by approximately eight key officials and employees of the city. The state auditor's office recommended that one-third of the eight salaries be paid from sewer revenue.
The greatest portion of the rate increase is being deposited into a sewer separation fund which, as stated before, will be used to pay for the construction. That portion of the revenue used to pay administrative expenses ("splits") is less than 4 percent of total collections.
When presented to Tiffin City Council, each member voted to accept and implement the new rate structure. They were aware this included the administrative fees. Months later, a few councilmen balked at the use. To this day, the only reason given for their opposition is they essentially "do not like administrative fees" or, as one member stated, "they are immoral." None of these councilmen can substantiate any tangible reason for their requiring the taxpayers to continue to shoulder expenses incurred by someone else.
During the 2011 budgeting process, these councilmen scaled back sewer funding for administration, resulting in cuts in city services. Among these cutbacks were the elimination of our field service officer who enforces parking regulations and who handles dog and wild animal complaints; the elimination of the secretary in the city engineer's office, which will result in that office frequently being closed during business hours; the reduction of money used to fund economic development, which is a necessity during these times of economic duress; and the cutting of funds for our police department accreditation.
What is ironic about the whole situation is that no one not the taxpayers nor the sewer customers will experience any economic benefit from any of the council's actions. In fact, the citizens stand to lose in terms of expected services that have been and will be cut.
We cannot raid the sewer fund for other purposes, as some are suggesting we are doing. But, by having sewer revenue cover all of its own related expenses, we are doing everything in our power to keep from raising taxes for other services. And, raising taxes is something none of us wants. Compensating for sewer administration frees up taxpayer money that could be used to maintain safety services, pave more roads, etc.
I believe that failure to compensate personnel for the sewer administration is the same as if we were to take income tax money and use it to pay managerial fees for the electric or gas company. I doubt if people would support this.
