Progress Made in Sewer Department Crisis

Under pointed questioning by members of the Common Council, Water and Sewer Department director Guy Russo explained the history of a financial "perfect storm" which drained nearly all revenue from the Sewer department, and the steps already taken to bring the department back into financial health.

The special workshop meeting of the Common Council was called at the end of the regular September Common Council meeting to allow time for Russo to analyze the problem, and answer questions submitted by Council members. At that time, the Sewer Department was broke, and did not have the funds to meet expenses.

Russo blamed deliquent accounts and conservation as the main culprits in the Sewer Department shortfall.

"If bills had been paid as they regularly are," Russo explained. "We wouldn't be where we are today.

In the past month, with an agressive second billing, and lien notice program, the department has collected 38% of it's goal of $500,000 in revenue from these billings, and that's with two days left in the month, with a plentitude of late-payers who wait for month's end to settle up.

The meeting got off to a rocky start as Mayor Sebastian Giuliano designated the workshop as a sole function of the Common Council, and handed chairmanship for the meeting to deputy mayor and Council member Joe Bibisi.

Bibisi attempted to hold Council members to a preliminary recitation of submitted questions, which Russo would be asked to answer.

Instead, Russo made a lengthy opening statement, and then the Council members asked submitted questions and follow-ups.

Along with the nearly $200,000 collected against delinquent accounts, Russo explained that his department had applied for a $200,000 refund from the State Department of Environmental Protection and was preparing thousands of dollars in cuts in the deparment in areas from open jobs, to scheduled maintenance.

Council members peppered Russo, and city Finance Director Carl Erlacher with questions about bugeting process, audits and collections. They also quizzed Russo, and city attorney Tim Lynch about how the WPCA (Water Pollution Control Authority) operated, and where authority and responsibility for financial decisions rested. Both Russo and Erlacher admitted that procedures were not perfect at the WPCA or the Sewer department, but when revenue was good, the department remained out of financial trouble. When the economy forced individuals into financial binds, paying the sewer bill was often the last thing residents would consider.

"They pay their mortgage so they don't get thrown out of their house," Russo said. "They pay their car payment so they can drive to work. They pay their credit card bill so their rate won't increase. Our 18% interest fee was once considered punitive, and that's no longer true. And if you don't pay your sewer bill, it doesn't get reported on your credit report."

However Russo indicated that a collections agency is being interviewed to go after delinquents, and that property liens will be issued. He also suggested that turning off water to delinquent accounts is being considered, as is the publication of the names of delinquents.

Russo explained that the economy and conservation have also taken tolls on other water and sewer departments, and other utilities. Middletown has seen a 12% reduction in use of water and sewer.

The WPCA meets Thursday afternoon, and Russo intends to present his cost-savings and revenue-increasing measures to the authority for a vote.

WPCA Endorses Solvency Plan

The Water Pollution Control Authority voted Thursday to endorse a plan submitted by Mayor Sebastian Giuliano and city Finance Director Carl Erlacher to pump money into Middletown's sewer fund.

The sewer fund is currently operating at a deficit.

"It's crucial that we do something, extremely urgent," Erlacher said at the meeting. "We haven't been paying our operating bills, just our payroll."

In the past, the Sewer and Water Department, under the financially independent WPCA, has budgeted on a consumption basis, but that budgeting process has been problematic.

"That trend seems to be a little aggressive, at the least" Erlacher explained, noting that the optimistic billing figures have left the department in the hole for three years straight.

The plan to infuse cash, as detailed in a press release earlier Thursday from Giuliano, includes borrowing money from the $2.5 million General Sewer Improvement Fund, aggressively pursuing delinquent accounts through an outside collections agency, and cutting spending in the department.

Erlacher contended that rate increases may be likely, though his plan, if pursued aggressively may push off those hikes. They mayor feels that any rate hikes are unfair to residents.

"I don't think its fair to hit people who have been paying their bills with a rate increase because other people haven't been paying their bils," the mayor said.

WPCA member and Common Council member David Bauer also suggested that partial payments on water and sewer bills should apply first to the sewer deficit. Currently partial payments apply first to water bills.

The group also discussed tactics to convince delinquent accounts to pay bills. Those tactics included placing a lien on property, and shutting off service, something the mayor said the city has avoided doing in the past.

The group voted to endorse the plan unanimously, but WPCA member and Common Council member James Streeto attempted to convince the members of the Authority to make the language of their resolution stronger. Instead of endorsing the plan, he suggested that the group vote to implement the plan, but other members felt that the endorsement was strong enough.

Water and Sewer commissioner Guy Russo vowed to take immediate action but warned that his department could not avoid repairs or replacements that they are obligated to make to "protect the waters of the state of Connecticut."