SAUGUS — The Board of Selectmen held a sewer-rate analysis meeting on Wednesday night.
According to President of the Abrahams Group Matt Abrahams, the town needed an analysis projecting four to five fiscal years, including the upcoming fiscal year, as such research might put a sewer budget into perspective for one fiscal year.
“(A) one-year look or two-year look may look very different than a four- or five-year look,” said Abrahams. “We want to show a five-year look because we want to make sure that other years and what those look like are considered when the vote takes place.”
According to the analysis, the main objectives of the town’s five-year rate plan were to target projected retained earnings with a balance of 10 to 15 percent of the operating budget; to eliminate shortfalls, which requires retained earnings to balance the operating budget; to increase rates, so revenue could cover expenditures; and to fund a capital plan for infrastructure and equipment.
According to the research, revenues that were lagging behind the expenditures for the last several years finally started to keep up with expenditures in Saugus.
“You can see that generally revenues have trailed pretty far behind expenditures. For the last few fiscal years, there have been some sizable deficits there,” said Abrahams.
In fiscal year (FY) 2020, the revenues were slightly higher than $4 million and the expenditures amounted to $5.5 million. In FY22, both projected revenues and expenditures are $6 million.
“It’s the first year in a while where revenues are basically (caught) up to expenditures,” he said.
At the same time, according to Town Manager Scott Crabtree, the water and consequently, sewer enterprises, are the most difficult operations to predict and estimate relevant revenues.
“It’s very difficult to predict those, and it’s really challenging,” said Crabtree.
Crabtree said if the summer is wet, and it rains a lot, people use less water, or they conserve water out of environmental considerations. The less people who use water, the less revenues the town receives, and it then has “an exponential effect on the rate that needs to be increased, because there is less revenues,” he said.
“So, if there was a wet season where less water was used, this has a major effect on where we are going to be with revenues,” said Crabtree.
Abrahams added that the pandemic might have a decisive impact on the patterns in which water is used. When COVID first hit, “we also experienced an extremely dry summer,” he said.
“So, people were home, nobody was going anywhere for the entire summer,” said Abrahams. “It was really hot. We didn’t get much rain at all. So, there was a tremendous amount of outdoor water usage.”
That new pattern might remain, as more people will be working from home more often than they did before the pandemic, said Abrahams.
Debt service related to the capital plan will continue to have a significant impact on the sewer enterprise over the next several years, according to the assessment.
Items and projects that will be funded via debt service, according to the town’s five-year capital plan are: a sewer-rehabilitation subsystem and a water-meter replacement program in FY23, a lift-station design and improvement in FY24, and the replacement of a utility truck in FY26. The total projected debt service for fiscal years 2024-27 is $1.73 million.