The board of the Great Lakes Water Authority finalized its first-ever budget Wednesday.
The GLWA emerged from Detroit’s bankruptcy. It now provides wholesale water and sewer services to millions of people in southeast Michigan.
The GLWA inherited some issues when it took over operations from the city of Detroit this year—including millions in bad debt from the city of Highland Park, mostly for unpaid sewer bills dating back many years.
The Authority petitioned Gov. Snyder’s office last month to help resolve that issue.
CEO Sue McCormick says the Governor’s office responded this week, indicating it will try to help resolve the issue. Highland Park did make a $160,000 payment recently.
“So we’re very encouraged by both of those things, but certainly this is not a problem I would yet say is resolved,” McCormick said.
McCormick says that’s part of the reason why base sewer rates will go up an average of nearly 5% in July, and probably about the same amount next year.
Base water rates will go up an average of 4.3%. Each customer community sets its own rates on top of the wholesale prices set by the GLWA.
The Authority budgets based on “revenue requirements” needed to fund each system. Per the memorandum of understanding that created the GLWA, it’s required to hold budget increases to 4% a year at the most.
Brian Baker, who represents Macomb County, was the only board member to vote against the new budget. He argued that in the two-year budget, the GLWA is pushing against that cap each year when it doesn’t have to, and could cut customers more of a break on rate hikes.
But McCormick says there’s a need to budget conservatively, especially given the fact that GLWA is expected Flint and other Genesee County communities as water customers to the new Karegnondi Water Authority.
“We know that we will lose a major customer in the second year of this process. And we want to be very careful not to have a significant negative impact on our customers in that second year,” she said.
Board chairman Robert Daddow, who represents Oakland County, said that given the recent Flint water crisis, he suspects the GLWA will also need to budget money for upgrading and replacing lead pipes.
“This budget has provided nothing toward lead issue, toward remediation. No dollars have been set aside or even quantified,” Daddow said.
The new budget does include money for some other infrastructure improvements. But the GLWA needs to issue bonds to pay for that, even though more than half its budget for both systems already goes toward debt repayment.
“That will always be a balance,” McCormick said. “At this particular point, we are still in a position where we don’t have a lot of funds to use for that. So nearly 95% of the dollars that we’re going to spend on [capital improvements] will be debt of some sort.”
