Why Water and Wastewater Authorities are Formed
Recent news stories, letters-to-the-editor, and public comments have provided residents of the City of Williamsport and customers of the Williamsport Municipal Water Authority (WMWA) and Williamsport Sanitary Authority (WSA) plenty of opportunities to question how and why the Authorities operate in the manner they do. These Authorities provide essential services to the region, but largely go unnoticed from day to day. This is because an expectation exists that when a faucet is turned on, high quality water will come out. When a toilet is flushed or a bathtub is drained, the wastewater will be treated to State and Federal standards. While we take great pride in doing our job without fanfare, an unfortunate side-effect is that negative news articles such as rate increases or main breaks become the primary source of information for most. As a result, opinions may be formed without having the benefit of information such as:
- Why the Authorities were created;
- How the structure of a public Authority benefits its customers;
- How and why user rates and other fees are established;
- Why the policies enacted by the Authorities are in the best interests of customers;
Without knowing the why's and how's of a municipal authority, it can be easy to draw inaccurate conclusions based on assumptions and incorrect information. This article and ones that will follow will hopefully answer these questions, and provide some insight and clarification on how your Authorities best serve the public needs.
The Authorities were created via City Ordinance and Incorporated by the Commonwealth of Pennsylvania in 1946 (WMWA) and 1952 (WSA). These original documents define the singular purpose of the Authorities as providing for the water and wastewater needs of the City of Williamsport and other service areas. The primary reasons for the creation of Authorities are to separate the operation of highly complex water and wastewater systems from the other responsibilities of local government, to operate these systems outside of the taxing structure of local government, and to separate the operation of the water and wastewater systems from the other local political and financial decisions facing local governments.
Authorities are exempt from taxes because they are a local government entity, created to perform essential municipal functions. Costs to operate and maintain the infrastructure of the systems are reviewed and budgeted annually, and rates are established to pay for these costs only. The recent request for a PILOT (Payment in Lieu of Taxes) contrasts sharply with the very reasons the City of Williamsport created the Authorities, and confuses a local government unit with non-profit institutions such as hospitals or colleges, which are not connected in any way with City government. The PILOT, a method to request funding from non-profit institutions, when applied to a local water or wastewater authority simply becomes a transfer of costs between government entities and trades off local taxes for water/sewer rates. Water and sewer rates, established only to create funding for water and wastewater needs, would need to be increased for City customers in order to pay for any contribution or aid to enhance the City's General Fund. The Authorities have no other source of generating revenue other than from their customer base. The cash balances now held by the Authorities are primarily the result of recent bonds issued to pay for plant and collection/distribution system upgrades. The Sanitary Authority alone has close to $80 million in contractual and anticipated costs remaining to be paid on $120 million in State and Federal mandated upgrades to its sewage treatment plants.
While the WMWA and WSA do not believe water or sewer user rates should be increased to pay for a contribution to the City's General Fund, we do believe there are opportunities for the Authorities to work more closely with the City in reducing overall costs and better managing local governmental functions.