Tuesday, October 16, 2012

Government watchdog group: Limit S&WB rate hikes until reforms occur

Posted By on Tue, Oct 16, 2012 at 1:40 PM

The Bureau of Governmental Research (BGR) is asking the Sewerage and Water Board (S&WB) to delay and limit proposed rate increases until the board, along with city and state government, "fix the way [S&WB] is governed and the way it operates," reads a report released today.

The S&WB's board of directors is set to meet tomorrow to review the rate hike plan, which Times-Picayune reporter Richard Rainey describes here:

The committee agreed that 10-percent annual hikes in rates for water and sewer use should be spread over eight years, rather than earlier proposals to enact steeper increases over five years. Customers' average service bills could climb from $52.50 to $86.36 by 2016, or about $8 less than its earlier rendition. But that comes with a cost to the board, which will collect $32.8 million less through 2020 than a previous rendition.

(More after the jump)

BGR, however, says the rate hike should be delayed until the agency's governance is restructured, removing the mayor and City Council members from the board, setting shorter terms and term limits. The group also asks the state legislature to amend state law, authorizing the agency to set annual increases by "an amount tied to a suitable index or other measure, without City Council approval" and that New Orleans City Council develop a full regulatory process for the agency.

Here are all the recommendations:

To better align the S&WB’s responsibilities with funding authority and improve the City Council’s decision making:

—The State Legislature should amend state law to authorize the S&WB to increase water and sewerage rates annually by an amount tied to a suitable index or other measure, without City Council approval. State law and the city charter should be amended to allow limited increases for drainage fees.

—The City Council should consider requests for larger increases using a formal review process, which at a minimum should provide for independent analysis of the requests, appropriate opportunities for public comment and clear timelines. The City Council should also adopt a formal process for considering S&WB requests to levy taxes and fees.

—The City Council should develop a comprehensive, ongoing process for regulating the S&WB, which includes reviewing the S&WB’s strategic and financial plans and reports, and regularly monitoring the S&WB’s performance.

The State Legislature should further amend state law to:

—Reduce the terms of board members from nine years to four years and stagger the new terms.
Limit members to three consecutive terms.

—Require that seven of the nine members of the board have extensive experience in one or more of the following areas: finance, accounting, business administration, engineering, law, information technology or public health.

The S&WB’s board should:

— Limit its role in the agency’s contracting primarily to broad issues of policy and oversight. It should establish appropriate policies and goals to guide management’s contracting processes, and set goals for the Disadvantaged Business Enterprise (DBE) program. It should monitor management’s performance toward those goals and adherence to board policies. It should restrict its review of individual contracts to extraordinary ones, such as significant privatizations.

—Establish an annual process for evaluating the performance of the executive management, including but not limited to measuring performance against objectives identified in strategic or financial plans adopted by the board.

Read the full report: SWB_10-2012.pdf

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