The day of reckoning has come for Monroe water, sewerage, and waste customers, with hopefully the delay induced by a penny-wise, pound-foolish City Council majority won’t end up costing ratepayers over time more than the amount of money they were able to retain over the past year.
At its last meeting of the year, councilors sent out a warning that customers of city water, sewerage, and water services could expect to see a rate hike by May. Democrat Chairman Rodney McFarland likened the increase to halt a “kicking the can down the road” on rates and said he would vote for whatever the independent Mayor Friday Ellis Administration determined was necessary. While it’s good practice to ensure these services pay for themselves and leave a healthy balance in reserve for future needs, practically speaking the fund can’t go too low because of stipulations attached to bonds issued for capital items, and as well as the lower the reserve, the higher interest rates on bonds issued will be. Indeed, existing debt was dropped two notches in quality by one of the big ratings firms because of this repeal.
It was a remarkable turnaround for McFarland, who along with fellow Democrats Verbon Muhammad and Juanita Woods blew up the mechanism that would increase rates in line with inflation. Previously, the city had an ordinance with that escalator clause to back the bonds but not long after McFarland and Muhammad joined the Council, they repealed that, saying they should look at this on a periodic basis and not forced into anything. Early this year they did take a gander and kicked the can down the road by denying an Ellis request to move rates higher by 2.7 percent.
That will come back to haunt customers if the increase is substantially more than the forgone hike. What was saved could be handed over and more, plus the city will have lost out on additional money to invest in the reserve that could have grown funds available and pulled down the level of future, inevitable increases needed to put the city’s underfunded system on more solid footing.
Perhaps had the wasted time been put to good use, the delay might have been worth it. The interval could have been used to implement cost-saving measures. But an idea to contract garbage collection was batted away. The Democrats in the majority initially said they thought their constituents wouldn’t like it and then proceeded to have community meetings about it, yet apparently still think that way since nothing has come of that suggestion.
However, good governance and leadership don’t just parrot perceived constituent preferences; you have to do what’s best for the governed even if a majority initially appears against that. Cities that privatize waste collection typically save money without service degradation, and a comparison with West Monroe, which does that, shows it has equivalent rates (before the coming Monroe increase) but a financially healthier system. Yet with city jobs at stake (a private operator likely can do the same or a better job with fewer employees), policy-makers often carry those employees’ water rather than decide with ratepayers foremost in mind.
Monroe also should consider privatizing water and sewerage provision, More and more local governments are doing that, and in Louisiana a handful of smaller municipalities have taken that plunge. Others, including larger ones like Bossier City, continue to own water and sewerage assets but contract out the management. In Bossier City when it made the switch from city management about a decade ago, costs were controlled and reasonable rate hikes made occasionally but certainly not annually.
But none of these options that could reduce the need for, if not obviate, rate increases have yet to be considered seriously in Monroe. It would be wise for the city to do so to blunt what could be a series of unwelcome rate hikes after clients take medicine on the upcoming one.
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