DIVISION OF WATER REVENUES
Important Correspondence on this Subject-Inquiry as to Increasing a City’s General Revenue by Raising Water Rates, and Superintendent O’Shaughnessy’s Reply
To the Editor :
The other day the following inquiry was received from one of the large cities in the west:
“The question of increasing the general revenue of this city is a very vital one at this time, and various ways and means have been suggested looking toward that end. Among the suggestions is one that the revenue derived from water rates be increased so as to produce a considerable surplus which can be turned over to the general revenue account. I am writing you to ask if any portion of your Waterworks revenue is applied to the general expenses of the city outside of the operation and maintenance of the Waterworks. I have been informed that in some cities the Fire Department is maintained out of the Waterworks revenue. Is any portion of your Waterworks revenue, appropriated to pay the expenses of the Fire Department, or any portion of such expense? Is your Waterworks revenue turned into the general revenue of the City and then expenditures for Waterworks purposes made from the general revenue?”
Believing you would possibly be interested in the reply, I herewith hand you the following reply:
“The policy of the Division of Water of this city has been to so conduct it that it would be self-sustaining, and whatever dividends it might earn should be turned over to the stockholders (the consumers, not the taxpayers) in the form of a reduced water rate. The primary object of its ownership by the municipality, aside from its service to the community, must be to reduce the cost of water to the consumer. Its control was certainly not obtained for the purpose of inaugurating an auxiliary method of taxation. That would be manifestly unfair. To illustrate: Columbus has several large factories which have their own water supply, obtained from the river or from their own wells. Every one of these factories is connected to the city service, for cases of emergencies, and all of them have fire lines in close proximity. Is it fair, then, that these people, who pay into the treasury of the Division of Water little or nothing, should have the water consumers’ dollars played on their buildings in cases of fire, and they obtain a reduced taxation because the city is making up the difference from the water consumer? And, morever, hundreds of people buy water as an adjunct to a taxable piece of property they are renting. They buy it as they do their fuel or other necessities. Why not tax these other necessities proportionately and justify it because the city is facing a vital revenue crisis?
Yon might ask if the city of Columbus pays its proportion of taxes. I would answer it surely does; and more. In this way it does. It gets nothing for the fire protection it renders, and that tire protection not only consists of the water it affords in cases of fire; it means the outlay of a great deal of money in the necessarily increased size of its pipe in the distribution system, the cost of maintaining a higher pressure at the pumping station and the equipment therefor, the additional of purifying and softening a greater supply of water, etc. The Division of Water derives no revenue for water supplied other municipal institutions, such as the workhouse, the garbage reduction works, the sewage disposal works and the light plant, to say nothing of the remainder. Yes, if this money were paid to the water works, it could well afford to pay the full amount of its taxable value, and for any other service the city renders it through its officers.
While the foregoing does not complete my reasons, 1 believe it enough to convey my unalterable opposition to any plan to divert the revenues of the Division of Water to the precarious channels of increased general revenues, even though emergencies of the times seemingly would justify it. In this city the water works revenue is not turned into the general revenue fund, nor is any part of the revenue applied to maintaining other divisions of the city. It is set aside into a fund called the Water Works Fund. From this is paid all costs of operating and maintaining the plant, interest on bonds and sinking fund charges for the retirement of these bonds. Extensions are made from bond issues which are retired when due.”
Wishing you a Happy and Prosperous New Year, I am,
Very truly yours,
Superintendent, Divisions Water and Sewerage. Columbus, Ohio, January 3, 1919.