Low Water Rates in Baltimore.
The Baltimore, Md., News of a recent date contained the following: “The News has from time to time pointed out the folly of our city’s present policy in maintaining such low water rates that the water department cannot produce enough revenue to cover its own expenses. Just now, when Mayor Preston is reported as lying awake at night in perplexity over the problem of keeping the tax rate for next year below $2.50, the need of readjustment becomes urgent. We understand that the water hoard has a new schedule or rates under consideration. The time when it is announced, and still more when it has been passed upon and accepted by the city council, will be a happy time for the taxpayer. The general levy has too long been made the dump heap for charges which individual owners should bear. In the year 1908, the aggregate receipts of the water departments of 14 cities of Baltimore’s class were $31,833,000. Operating charges, including main lenance, came to $13,786,011(1, and their operating revenue to $18,097,000. The total funded debt was $175,200,000, with an average interest charge of about 3.75 per cent., or $6,570,000. Exclusive of sinking fund charges, therefore, the water departments of these It cities were made to earn a profit of $11,527,000. The cities had a total population of 12,800,000. The net return was 90 cents per capita. On the same basis, Baltimore’s waterworks should turn over to the city treasury an annual profit of little less than $500,000. Were this the case, there would be a saving on the tax rate of 15 cents; of $4.50 per year to the owner of of a $3,000 house. As a matter of fact, in 1908, our ow’n water department, far from returning a surplus, was assisted from the tax levy to the extent of $220,000. In 1909 it w’as granted $54,000. Last year it made $11,000. In the current year it expects to run about even, unless some unusual repairs—those at Lake Ashburton, for instance—set it back. But it charges off nothing against depreciation, which on a $15,000,000 plant ought to come to at least $300,000 a year. It contributes only $15,750 out of a total sinking fund increment of about $150,000. Were it a private corporation instead of a public enterprise, this last fact alone would suffice to send it into bankruptcy. The water loan of 1958, amounting to $5,000,000, moreover, is just being tapped. As this is slowdy used up, new interest charges will be created, amounting in an end to $200,000. In other words, the water department, instead of earning enough to pay the interest on its bonds, depreciation charges and sinking fund increments, as elsewhere, will soon fall $200,000 short of earning its expenses and interest. This is anything but a satisfactory state of affairs. A water department should not necessarily or even properly be a money maker, but it should be selfsupporting. Its earning capacity should be sufficient to cover every charge incurred in connection with its plant or maintenance and provide for extensions due to the natural growth of the city. The blame cannot be laid at the door of the water board. The per capita operating charge in other cities works out at $1.08. In Baltimore last year the board spent $586,018.52. or $l.i>0 per capita. The trouble lies only in the plan of fixing our water rates so low that tile return is insufficient to meet expenses. In private business this policy usually spells ruin. Xor. so long as water is recognized as a commodity, is there any valid reason why a city should supply it to its citizens with varying needs at a loss? The following table of minimum water rates shows, nevertheless, that this is what we are doing, and it accounts very fully for the fact that the departments of other cities pay their way, while ours does not:
The average lowest rate is nearly two and a half times that of Baltimore. Were ours to be brought up to it and the higher rates ranged upward from it by their present increments, the increase in the department’s income would exceed $750,000; that is, it would permit a reduction of about 23 cents on the tax rate. So great an increase is unjustified, because it exceeds all the deficit in the department. But it is not too much for the taxpayer to ask that the water supply he made self-supporting, by a moderate readjustment of the rates to the actual cost of water as estimated on a sound business basis.