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NYC Water Rates Continue to Shoot Through the Roof
I have often complained about how here in NYC we have seen mass transit quality fall sharply (my wife even recently said she feels it is just starting to get as bad as it was in the 1980's) while the rates per ride continue to go up, up, up.
But recently, while going over the finances of my apartment co-op, I realized that there is another area where New Yorkers are being charged more and more and more...our water rates. I noticed how starting in 2007 water rates started going up far more sharply than before, and realized that this made little sense when one considered the rate of inflation. So I decided to compare on a year by year basis our water rate increases to the rate of inflation over the past decade. Here's what I found:
WATER RATE INCREASES FOR THE PAST DECADE:
(taken from the NYC Waterboard Website and from Bureau of Labor Statistics)
2011: + 12.9%
2010: + 12.9%
2009: + 14.5% (inflation: -.4%)
2008: + 11.5% (inflation: +3.8%)
2007: + 9.4% (inflation: +2.8%)
2006: + 3% (inflation: +3.2%)
2005: + 5.5% (inflation: +3.4%)
2004: + 5.5% (inflation: +2.7%)
2003: + 6.5 (inflation: +2.3%)
2002: + 3% (inflation: +1.6%)
2001: + 1% (inflation + 2.8%)
So really, before 2007 inflation and our water rate increases were not that out of sync. But starting in 2007 our water rates have started going up like crazy even though inflation has continued to be very low.
So my question is, where does that money go?
Interestingly, water usage has been going down just before the switch. This is a graph that covers up to 2006:
For more up to date info click here and go to the bottom chart.
Our reservoirs all seem at or near capacity:
(click here if the numbers aren't showing).
And the last NY State drought I find mentioned was in 2002, well before this sudden increase in the rate at which our water rates are going up.
So can someone explain to me why if inflation is low and supplies are good and consumption has been going down, why are our rates going up so fast? Who is making money off our need to drink water?
Re: NYC Water Rates Continue to Shoot Through the Roof
I believe that Local Law 2007/068 (signed on January 2, 2008) added failure to pay water bills as another reason for the city to put a lien on property, which could lead to foreclosure. It was designed to force landlords to get up to date on their water and sewer bills and forestall further large water rate increases.
It worked, to the extent that it continued the city's ability to force landlord to catch up.
It did not work, however, in stopping large water rate increases. Why? Because the city can't raise taxes, other than property taxes, without state consent, and the 2002 property tax increase (18%) is still too recent to do it again. Meanwhile, the Bloomberg administration is desperately seeking new revenue streams to balance the nearly $65 billion budget.
Enter water rates. Water rates are not officially a tax, but a fee, and the city's Water Board (handpicked by the mayor) can raise rates all it wants. One of the problems, as you note, is that water usage has dropped, meaning lower revenues; in other words, we may have reached the tipping point where higher taxes (excuse me: "fees") actually result in lower revenues. In fact, the same Columbia University article that you got your water usage chart from also shows that the actual money paid per household for water was lower in 2006 than at any time for at least the previous 25 years -- and that's not even adjusting for inflation!
In short, we have a fee on water use that is designed to pay for far more than the cost of providing water (it pays DEP costs as well). Since revenues are dropping annually, the only way to raise the money needed is exorbitant rate increases. In fact, adjusting for inflation and assuming that water use per capita hasn't declined since 2006, the average household will still pay less in water use fees than they paid 15 years earlier.
The real key is to separate the water use fee from revenues needed to pay for non-water use based services. Yes, other taxes (or fees) would have to be increased, but water rates could be reduced dramatically.