Mayor Andre Sayegh made the case to raise $3 million in revenue on Tuesday night to resolve the city’s budget crisis by increasing sewer fees.
Under the mayor’s proposal, the city will collect $1 million from residential and $2 million from non-residential ratepayers, according to information presented to the council. Non-residential includes nonprofit organizations and government entities that do not pay property taxes, but must pay sewer bills.
Taxpayers have been subsidizing the bills of non-tax-paying sewer users since 1985. Every year, the city uses approximately $5 million from its operating budget to cover shortfall in sewer collection.
“What we’re looking to do is to level the playing field so everyone pays their fair share,” said Sayegh.
Sayegh said the state wants sewer fees increased in return for $2 million in extra transitional aid. His administration has received word that the state will provide $29 million and another $4 million on the condition the city switches all employees to the state health plan and addressing sewer billings.
The mayor’s pitch did not sway the council.
Flavio Rivera, councilman at-large, argued against hitting taxpayers twice with a 2-percent tax increase and now an extra sewer bill. Taxpayers already paid to cover the sewer shortfall in the tax increase, he said.
“It’s being covered right now through the levy,” said Rivera. “This $3 million is a tax increase disguised as a fee.”
“There’s no disguise here. This is very transparent. We’re not trying to disguise anything. I take exception to use of that word as if we’re trying to do something nefarious,” rebutted business administrator Vaughn McKoy. “We’re not excited or happy about doing this, but we understand it needs to be done.”
Rivera favors tackling the annual sewer deficit. For years, he has called for the creation of a sewer utility so that all sewer operation and debt expenses are billed to ratepayers to make it self-sustaining.
“We have a need to set this up, but that’s in July,” said Rivera. “This $3 million would not set up the utility for us.”
Sayegh’s administration expects to set up the sewer utility in the next fiscal year, 2020, which starts on Jul. 1.
Rivera said the finance committee was presented with cuts that will balance the budget without the sewer increase.
But $2 million in state aid which is accounted for in the budget is tied up with making changes to sewer billings.
Rivera suggested speaking to representatives of the state to address the sewer at once in July rather than sending out an extra bill on top of a tax increase.
“We can’t continue to go back to taxpayers,” said council president Maritza Davila. She pointed out Sayegh repeatedly opposed even slight tax increases in eight of the ten years he was representing the 6th Ward on the council.
Sayegh viciously attacked one of his opponents in the mayoral race, longtime councilman William McKoy, for supporting budgets that had tax increases. Three weeks after taking office as mayor, Sayegh raised taxes by 2-percent to collect $3 million in revenue. Now, he is seeking to raise another $3 million by upping the sewer fees.
A single-family residential customer pays $224 per year for sewer, lowest among the state’s big cities, in Paterson. Same homeowner would pay $381 in Newark and $541 in Jersey City, according to data provided by the administration.
The extra bill will mean $40 to $60 increase for 70-percent of residential users. Sayegh’s proposal also changes the billing method to charge based on water usage.
The increase does not affect surrounding towns that connect to the municipal sewer system. Municipal officials will attempt to increase rates for those users after creating a sewer utility.
“We’re just asking you to support us to do what you’d do in your own home,” said McKoy referring to household finance. “I know it’s not popular.”