A meeting tonight at Hamilton Township's municipal building could really get ugly when people from the surrounding areas get together to discuss the impending sale of the Trenton Water Works’ outside infrastructure to New Jersey American Water, a company that plans on leveling large-scale rate hikes on its new suburban customers.
That’s because of recent media reports that finally detailed for all to see the fiscal mismanagement going on in the City of Trenton, which has been using the city water works as a massive cash-generating facility to plug gaps in the rest of the city’s municipal budget.
Normally that would not be so bad, considering the city actually owns the utility, but such practices are actually unlawful because the Trenton Water Works serves thousands of customers outside of the city. With their rate money being used to pay for other areas of municipal services, it's as if Trenton is taxing people living outside of its borders to fill budget gaps.
Business Administrator Jane Feigenbaum deflected criticism by saying that the city’s move, in 2006, to equalize the rates paid by city residents and those living outside of Trenton removed the utility from Board of Public Utilities oversight and allowed the city to use the works for general city revenue.
But the only problem with that, according to Trenton Water Works employees contacted today, is that the nefarious practice of robbing revenue from the water utility has been going for years, untouched and unpunished by anyone, as the city continually removed more than the 5 percent of the works' revenues allowable by law and plugged it into the city budget.
The Department of Public Works, the Fire Department, and other departments that do little to no work related to the Trenton Water Works have received hundreds of thousands of dollars from the water utilities budget and the wallets of suburban taxpayers.
For a more personal example level, city communications employee and Mayor Palmer's publicist, Kent Ashworth, has had his entire salary show up on the suburbia-supported Trenton Water Works budget.
It appears that now, with suburban residents facing higher rates that will exacerbate their cost of living issues, have more serious complaints been raised, and a Times of Trenton article written on the issue, which only partially revealed the way the Trenton Water Works has been abused by the Douglas H. Palmer administration.
Suburban residents and officials fed up with getting the short end of the stick from Trenton’s administration and city residents fed up with the same administration’s unlawful behavior should really consider taking drastic action before the sale goes through, which will both hurt Trenton’s long-term fiscal viability while dooming suburban residents to skyrocketing water costs.
Gee, sometimes the interests of suburban residents and those living in Trenton actually do converge.
Wednesday, July 23, 2008
Water Works to get discussion time tonight
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40A:4-35. Utility operations; surplus; deficit
If, in any year as a result of the operation of such utility or enterprise under the system of accounting thus directed, there shall be a surplus, or such surplus can be reasonably anticipated, then such surplus, when authorized by the board or body controlling the utility or enterprise, may be included in the budget as an item of miscellaneous revenue, under the caption of "Surplus from (designation of the utility fund)" .
If, in any year as a result of such operation, there shall be a deficit or an anticipated deficit, then an appropriation for such deficit shall be included in the budget under the caption of "Deficit in (designation of the utility fund)" . If any anticipated deficit shall exceed the appropriation therefor, the excess shall be provided for in the budget of the following year. This section shall not, however, supersede the specific dedication of receipts from a utility or enterprise as provided in any law which authorized the establishment or creation of such utility or enterprise unless so directed by the board or body controlling the same.
40A:4-35.1. Transfer of surplus revenue
To the extent there is available surplus revenue collected by a municipality pursuant to chapter 62 of Title 40 of the Revised Statutes for supplying a utility service which is regulated by the Board of Public Utilities pursuant to subsection d. of N.J.S.40A:31-23, an amount not to exceed 5% of the annual costs of operation of the utility may be transferred annually from the accounts of the municipal utility and included in the local budget pursuant to N.J.S.40A:4-35.
L.1983,c.111,s.5; amended 1989,c.109,s.2.
The City's actions (transfer of surplus exceeding 5% of prior year's expenditures) could indicate that it, the City, believes it is not regulated by the BPU. Or it could indicate something else like the complete disregard of the law. This would be consistent with the City's Administration's stated operating principle of do anything irrespective of or without concern for whether it is lawful or regulatory compliant and then wait and see if someone or something challenges it. Nevertheless, if it believes or will contend that it is not regulated, then it acts under what is allowed by 40A:4-35. However, if the City is regulated by the BPU, then it should act under what is allowed by 40A:4-35.1, which is significantly different than 40A:4-35 and which would not allow the transfer of $6M.
With respect to the question of whether it is regulated, the only aspect of BPU regulation that is absent with the equalization of rates is the BPU oversight over the change in rates. This is supported by the following excerpts from the statutes (see paragraphs e and f):
40A:31-23 Nonimpairment of obligations for provision of water supply services, facilities; BPU jurisdiction.
40A:31-23. a. Nothing contained in this act shall in any way impair the obligations previously assumed by any other public or private agency for the provision of water supply services and facilities to the citizens and industries of this State, or for any other purpose authorized by any law repealed by N.J.S.40A:31-24.
b.In the event a municipal utilities authority has been established in a local unit pursuant to the provisions of the "municipal and county utilities authorities law," P.L.1957, c.183 (C.40:14B-1 et seq.), no local unit or units shall establish any facility within the territory of that local unit which is competitive with any water supply facility operated by that authority.
c.No water supply services shall be provided in accordance with this act to users in another local unit without the prior approval of the governing body of that other local unit.
d. (1) Except as may otherwise be provided by subsection e. of this section and subject to the terms of any agreement entered into by participating local units or between a supplying and receiving local unit or units and the provisions of this act, a local unit or local units owning and operating water supply facilities in accordance with the provisions of N.J.S.40A:31-4, which supply water to more than 1,000 billed customers within another local unit, shall be subject to the jurisdiction, regulation and control of the Board of Public Utilities in accordance with the provisions of Title 48 of the Revised Statutes. The provisions of this subsection shall not apply whenever water is supplied to customers in another local unit at bulk rates.
(2)Notwithstanding any provision of this subsection to the contrary, whenever the governing body of a city of the first class enters into a contract with a duly incorporated nonprofit association for the provision of water supply services as defined in subsection (16) of section 15 of P.L.1971, c.198 (C.40A:11-15), or the designing, financing, construction, operation, or maintenance, or any combination thereof, of a water supply facility as defined in subsection (16) of section 15 of P.L.1971, c.198 (C.40A:11-15), and that governing body operates water supply facilities as authorized pursuant to the provisions of N.J.S.40A:31-4, which supply water to customers within another local unit, the nonprofit association or governing body shall be subject to the jurisdiction, rate regulation and control of the Board of Public Utilities to the extent the nonprofit association or governing body supplies water to customers within that other local unit. The provisions of this paragraph shall apply whenever water is supplied to customers in another local unit at bulk rates.
e.Notwithstanding any law, rule, order or regulation to the contrary, whenever any supplying local unit or units charge the same rates or rentals to the billed customers outside of the supplying local unit or units as are charged to customers within the supplying local unit or units, the local unit or units owning and operating water supply facilities in accordance with the provisions of N.J.S.40A:31-4, shall, with respect to the rates or rentals to be charged to users of water supply services, be exempt from the jurisdiction, regulation and control of the Board of Public Utilities. Any increase in rates or rentals to be charged to users of water supply services shall be authorized by ordinance, in the case of a municipality, or ordinance or resolution, as appropriate, in the case of a county or parallel ordinances or resolutions of the governing body of each supplying local unit or units, as appropriate. Prior to adopting a resolution increasing the rates or rentals to be charged to users of water supply services, the governing body of a county shall hold a public hearing. Customers outside of the supplying local unit or units shall have an opportunity to be heard at the public hearing.
f.Nothing in subsection e. of this section shall be construed to exempt any supplying local unit or units supplying billed customers outside of the supplying local unit or units, from the jurisdiction, regulation and control of the Board of Public Utilities, with respect to service and reliability.
g.Supplying local units shall continue to pay an assessment to the Board of Public Utilities in accordance with the provisions of this section for those billed customers outside of the supplying local units.
Amended 2002, c.47, s.11; 2005, c.267.
If and when the misappropriation of Water Utlity funds comes under the scrutiny of a juridictional agency, the City should also be required to explain why it allows discounts of water charges for certain City customers and not for Township customers. The City Ordinance covering charges for water includes the provision of discounts for seniors and veterans. (ARTICLE II 309-8 A. (4)) If these same discounts are not allowed for Township customers, then the rates are not equalized. If they are not equalized, then the City must eliminate the unequal treatment to continue to be exempt from NJBPU oversight of rates. Consequently, this should be brought to the attention and review of the NJBPU. If the NJBPU refuses to do what it should, then the Townships should consider bringing the matter to Superior Court.
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