Dominick Calsolaro

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Water Board puts rate hike on tap

In wake of deficit and state audit, Albany officials are considering proposal to boost costs again

Published on 10/30/2005 by the Times Union written by BRIAN NEARING, Staff writer, Times Union

ALBANY -- It may soon cost more to turn on the tap, take a shower or do the laundry.

In the wake of a state audit that blasted the city's water system for overspending and poor planning, Albany officials are eyeing the third rate increase in four years.

Water Commissioner Robert Cross said Friday the Water Board on Nov. 16 is expected to consider consultant William Kahn's proposal to boost rates. Cross said the recommendation would reflect findings of a state audit released in September. State Comptroller Alan Hevesi's auditors found the water system was "very poorly run" for turning a $1.8 million surplus in 1999 into a $10.7 million deficit by June 2004.

It said the Water Board and Finance Authority, which are jointly responsible for a system that serves more than 29,000 homes and businesses, piled up "huge deficits and fast-growing costs for Albany water rate payers."

Cross maintains the board's priority has been to keep rates low while overhauling an aging infrastructure it took over when the water system was separated from city government in the late 1980s.

Homeowners pay $2.29 per thousand gallons of water, which is less than in surrounding suburbs, he said. The last rate increase was in 2003, when rates went up 9.5 percent. Previous rate increases were 14.6 percent in 2002, 6.4 percent in 1999 and 3 percent in 1996.

Three consecutive annual 6 percent rate increases -- starting in 2005 -- are part of the Water Board's financial projections, according to the state audit.

On Friday, city Comptroller Tom Nitido said rate hikes were likely necessary, but the Water Board needs "to have a significant reduction in expenditures as well."

Spending on the water system rose 34 percent between 1999 and 2003, from about $12.5 million to $16.7 million.

Cross has said much of the fiscal woes stemmed from increased reservoir security after the 9/11 terrorist attacks. Additional lights, gates, motion detectors and a staff of guards were added with the expectation that the federal government would reimburse the cost. But that reimbursement did not arrive.

Council member Dominick Calsolaro blamed problems on the Water Board's "bad financial decisions," including a $7 million deal in 2003 to lease the Six Mile Waterworks from the city.