Commissioners urged to refinance sewer debt

August 01, 1997


Staff Writer

The Washington County Commissioners were told Thursday that they should consider refinancing the county's $56 million water and sewer debt over 40 or 50 years and raising the piggyback income tax in order to lower sewer rates.

Clarence W. Scheer, the chairman of the Water and Sewer Advisory Commission, said the commissioners should set a goal of cutting sewer rates next year by 1.5 percent, and hold future rate increases to 4 percent.

A financial model paid for by the county last year projected future rate increases in the 14 percent range, and a current plan would nearly double rates over 10 years.


Scheer said lowering rates would create a hole in revenue that could be covered in part by reducing the yearly payments on the debt.

Scheer said that could be accomplished by floating 40-year and 50-year bonds, instead of 20-year bonds.

"It could well result in a drop in the bond rating. So what?" Scheer asked. He urged the commissioners to "not get married to a bond rating."

County Finance Director Debra Bastian said a drop in the county's A+ bond rating would force the county to pay higher interest rates on all future bonds, not just those for water and sewer. Bastian said if the rating drops below BBB, the county might have to purchase $300,000 to $400,000 in bond insurance a year on future bonds for landfill construction.

Scheer suggested that the commissioners consider other options, including a temporary increase in the piggyback income tax to the maximum 60 percent of the state tax, pursuing grant money and holding down operating costs.

Scheer said the county couldn't keep raising rates without hurting economic development.

"Business people aren't stupid. You're not going to come in here if you know the utility costs are going to be too high."

County Commissioners President Gregory I. Snook said he wanted county employees to evaluate the options, but said that he didn't want to do anything that would hurt the county's bond rating and wasn't interested in raising the income tax.

Snook said the county had been put on a bond watch by New York bond rating agencies two years ago because of the water and sewer situation. The county was removed from the watch after a long-range plan was put in place.

"We worked very hard to get it to the level that we're at," Snook said.

Commissioner Ronald L. Bowers said setting a goal to reduce rates was the right thing to do but said he didn't want to hear anything about raising taxes. Bowers said the minute politicians start talking about raising taxes to bail out something, it gives employees an excuse not to work on creative alternatives.

The average water and sewer customer pays $87.20 for 12,000 gallons a quarter.

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