Starting January 1, 2016, Bayonne residents will see a 13.25 percent increase in their water rate bills and the City’s Municipal Utilities Authority Executive Director Tim Boyle and former Mayor Mark Smith are butting heads over whose to blame for it.
By John Heinis/Hudson County View
“The concession deal the previous administration entered into with the BMUA required us to make realistic estimations of what our revenue would be in the near future. They estimated that our revenue would be vastly more than we took in,”Boyle told Hudson County View over the phone yesterday.
Boyle explained that the estimated revenue by the Smith administration in 2015 was $26.5 million, but the number ended up being $24.5 million in reality.
“I have no idea what they were thinking, they were wildly inaccurate estimates,” he added, further stating that a budget shortfall of a million dollars is expected in 2016 (where the estimated revenue is $27.7 million).
The $2 million budget shortfall is still owed to BMUA’s contractor, which is a cooperative effort between SUEZ Water North Jersey (formerly United Water) and investment firm Kohlberg Kravis Roberts & Co. (KKR).
“In order to correct that, we could’ve done a nine-and-a-half percent increase this year and then a seven-and-a-half, eight percent increase next year. Rather than doing it twice, we did it to fix the problem once and for all.”
While Boyle admitted that “it’s a huge increase,” the estimated impact is still “a manageable sum of money:” about an additional $12 per month per user on average for about 12,000 account owners in Bayonne – claiming the increase can be as small as $3.87 per month in some instances, but will vary among households.
Boyle also stressed that the deal was a good one, given that $1.33 will purchase 100 gallons of water.
Furthermore, the agency’s executive director addressed the notion that $11 million were set aside as “a rate stabilizer,” essentially calling that mindset a myth.
“Some seem to think there was a great big pool of money left behind for BMUA used as a rate stabilizer. That’s not true. It was left behind for the city as a tax stabilizer. [It] had to be approved by the local finance board in Trenton.”
Additionally, Boyle said “our goal was to fix the problems, not to move them down the road.”
Former Mayor Mark Smith addressed the situation head on, stating that his administration eliminated over $100 million in debt and allocated over $22 million as surplus.
“When we made this deal with KKR, Bayonne’s water system was 80 years old. My administration wanted to make the investment into that system, hence the deal with United Water and KKR. We were able to retire $100 million in debt,” Smith explained.
“With left [the BMUA with] an excess of $22 million surplus, that money was specifically used as weight stabilization. What this administration did was take a couple of big chunks of that money and burned through $22 million surplus to cover their misjudgment as the policy of running this city.”
“They’re just trying to cover their behinds on their shortfall. They’ve dug themselves a ditch and they forgot to bring a ladder. They’re trying to deflect from their mismanagement of the authority,” Smith added.
According to a letter dated September 22, 2014 discussing the concession agreement between the BMUA and the State Department of Community Affairs, “the $11,237,178.65 remains in the Authority’s accounts pending a request by the City, and your approval, to use same in a future budget for sustainable property tax relief.”