In 1993, the City Council voted to raise sewer fees by 40 percent and restructured the basis for determining the sewer fee to be paid by each household. As a result, the average household now pays more for sewer fees than for drinking water. Naturally, thousands of customers lodged complaints about the unfairness of this rate structure and how the costs of being connected to the city's sewer system are outrageous. A recent survey of 129 cities across the nation indicated that Honolulu has the fifth-highest monthly sewer bill of all major cities.
The reduction in the sewer fees means we can return savings achieved bytrimming the operating budget for the Department of Wastewater Management. This fee reduction is the first step toward gaining public confidence that its money is not being wasted. We are attempting to meet the expectations that are required of any utility. The Public Utilities Commission and Consumer Advocate demand that any utility must demonstrate that an increase in rates is absolutely necessary and not just to raise revenues. The approach we are taking at the wastewater department is to trim operational expenses first before requesting an increase.
Some may argue that since there is a billion-dollar sewer upgrade program in the future, it doesn't make sense to reduce fees now only to raise them again. I believe that it is precisely because there is a major investment program ahead of us that we need to "get lean" and demonstrate to the rate payers that when savings accrue the public will benefit from our efforts to save money.
Otherwise, we will have to ask overtaxed and financially drained customers to shell out even more money when the new program gets under way. Today's rate payers are very sophisticated and want to be shown that they are not being asked to continue to finance excessive expenditures.
Others argue that we should be building projects now instead of deferring them to later when the costs will be even greater. This approach can be characterized as the "let's throw money at the problem." It doesn't work. Many jurisdictions have already found that the massive expenditures they made over a short period of time yielded minimal positive results.
For example, Houston launched an ambitious billion-dollar program in 1985 and, after spending nearly $750 million over eight years, concluded that water quality in its rivers had improved by only 5 percent!
The East Bay Municipal Utilities District in Oakland spent $450 million over 10 years and still has not solved its collection system problems.
However, we in Honolulu have been given a golden opportunity to develop a long-range plan for our projects and to properly finance them. The agreement with EPA, which has been accepted by a federal court, allows the city to develop the long-range system improvement plan and to submit the plan on Dec. 31, 1999. Based on this plan the city and EPA will agree on the improvements needed for the next 20 years. Then the city must make the investments that it has agreed to do.
The city negotiated this time frame for its program in part because of the experiences of other cities such as Houston and Oakland. Now that we have negotiated a schedule based on the lessons from other jurisdictions, does it make sense to blindly throw the money at the problem just as they did? I think not.
Some have argued that we should take the excess money that is now generated by the existing sewer fees and "bank" the money to use when the program is ready to be implemented. This "pay as you go" approach is a financing strategy being implemented in other jurisdictions. We recognize this as a viable possibility for us.
But how much money should be put into such a "bank"? We are currently developing a 25-year financial plan in concert with the development of 25-year master plans for all our facilities. When the facility master plans and the financial plans are completed, then we would have a rational basis for how much money needs to be banked. What's more, we will have all these plans completed by 1999. Then we can hold meaningful discussions with EPA on what should be done, what the costs will be and how we can pay for the projects.
In summary, the mayor's proposal to reduce sewer fees makes plain common sense. Thecost of operating the wastewater department is being reduced through cost efficiency measures and the savings are being passed on to the customers. We are developing a comprehensive long-range plan for all our facilities plus a financial plan to guide us in paying for the program. This is the best way to judge the fairness and need for fees for any utility. And that is precisely what we are doing.