Department of Finance opposes Mayor Young’s income-based water-billing reforms

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After months of waiting, the day is finally here for Baltimore City Council members to hear testimony on Mayor Bernard C. “Jack” Young’s proposed overhaul of how water bills are calculated for low-income Baltimoreans. At least one city agency is already opposing the bill.

The Department of Finance has submitted a letter opposing Young’s Water Accountability and Equity Act, due for a hearing tonight at 5 p.m. with the Taxation, Finance and Economic Development Committee.

One of the department’s reasons stems from language that would create an Office of Water-Customer Advocacy and Appeals. (Young’s bill is broader in scope, with a primary goal of instituting a tiered system to scale low-income households’ water and sewer bills to their income to make them more affordable. We’ve explained how that would work here. )

City water customers, a number of whom have shared horror stories of receiving surprise erroneous bills for thousands of dollars, currently go through DPW’s Customer Support and Services division to resolve disputes. Young’s bill would create a dedicated, independent office to handle those claims, with assigned “customer advocates” for individual cases, and allow customers to appeal decisions by DPW.

But Robert Cenname, the city’s budget director, voiced concerns in a letter dated May 15 about the new office being funded with water and wastewater funds—revenues the city is already using to fund billions of dollars worth of infrastructural repairs—primarily because of the source. “Any new costs would be borne by the water and wastewater funds and could lead to rate adjustments beyond those already planned,” he wrote, signaling Baltimoreans could face even more unwanted rate increases as a result.

Mayor’s office spokesman Lester Davis said he had no comment on the Department of Finance’s letter.

Davis said Young’s legislation, which offers more assistance to low-income bill payers than H20 Assists, is still moving forward at tonight’s hearing. However, Young, who proposed the ordinance when he was still council president, is no longer directly involved in the legislative process, Davis said. “I know the council is working on it and I trust they’re gonna be thoughtful, but it’s out of his hands at this point.”

DPW has not publicly shared its position on Young’s legislation, but when reached for comment today, agency spokesman Jeffrey Raymond noted Young on Wednesday announced his support for DPW’s new income assistance program, dubbed Baltimore H20 Assists, set to roll out July 1. The program offers help paying the bills–specifically, a flat 43 percent discount–to households with income at or below 175 percent of the federal poverty limit, and Raymond said it “will impact as many as 43,000 customer accounts.”

Raymond noted Young also recently announced the creation of an independent review process within the city’s Environmental Control Board that will facilitate reviews of customer bills–a plan that would appear to compete with his own plans for an independent customer advocacy office.

Rianna Eckel, Maryland organizer for Food and Water Watch, part of a coalition of organizations backing Young’s legislation, said Cenname’s prediction about the risk for more rate increases is a rather cynical–and not necessarily true–prophecy. She pointed out DPW has already planned additional water increases in future years, including yet another three-year, 30 percent water rate hike for fiscal 2023-2025 piggybacking off the one taking effect this July.

And those were already planned as of this past fall, “before [Young’s] proposal came into existence,” she said.

DPW also budgets millions annually for customer service positions in its own department, she said, and Cenname’s letter doesn’t consider whether those dollars could be re-allocated to fund jobs in the customer advocacy office.

“At the end of the day, this wouldn’t bankrupt the city or cause a spike in rates in the way that the Department of Finance, and I assume the Department of Public Works, would try to portray,” she said.

Finance also objects to Young’s bill for a reason unrelated to water bill costs. While a new state law outlawed the use of the tax sale process for unpaid water bill debt this year, the city still encourages investors to purchase liens on homeowner-occupied properties with unpaid property taxes as part of its annual tax sale. If an investor does buy those liens, a homeowner must repay the debts back to that investor—with an added 12 percent interest payment, under city law—if they want to retain their home.

Young’s bill includes language to lower that interest rate from 12 percent to 5 percent. Cenname argues the change would deter investors from partaking in the tax sale process each spring, which in turn could cost the city millions in revenue that it earns.

“We do not believe that a 5% return is nearly enough to compensate investors for the risk of collection of delinquent bills each spring,” he wrote.

There’s currently $22.5 million owed by city homeowners for delinquent property tax payments, he wrote, and “without the threat of tax sale, all of this General Fund revenue is at risk.”

Eckel said even though it’s a non-water-related issue, advocates support reducing the interest rate in tax sale payments because it “prioritizes people first”—namely homeowners already who are already struggling to pay their bills.

Finance’s letter, she said, indicates the department cares more about “propping up investors and DPW rather than looking out for low-income Baltimoreans and people who really need assistance, and really need a system to change.”

Tonight’s hearing presents the next hurdle for Young’s proposed overhaul of the city’s fraught water billing system.

For what it’s worth, the Mayor’s Office of Human Services and the Baltimore City Health Department have both submitted letters in support of the bill, saying the income-based framework stands to benefit families and, particularly, elderly and aging Baltimoreans who are increasingly unable to pay their water bills.

Health Commissioner Dr. Letitia Dzirasa wrote that under DPW’s current process of in-house bill dispute resolution, seniors “often receive an indifferent or confusing response.” Creating a dedicated customer advocacy office “will give these vulnerable adults a mechanism for resolving disputes, and an advocate for resolving billing discrepancies.”

“The Mayor’s Office of Human Services is in support of any attempt to create a comprehensive water assistance program for constituents,” added Mayor’s Office of Human Services Director Terry Hickey.

A key difference between the billing assistance offered under Young’s proposal versus DPW’s: the former would cover renters, who could opt-in for the city’s assistance program, while H20 Assists would benefit only homeowners with existing city accounts.

Another important distinction, according to a new legislative analysis comparing both programs: Young’s bill would have a projected $44 million cumulative cost over the next five years, while H20 Assists would cost roughly $63 million.

This story has been updated.

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Ethan McLeod

Senior Editor at Baltimore Fishbowl
Ethan has been editing and reporting for Baltimore Fishbowl since fall of 2016. His previous stops include Fox 45, CQ Researcher and Connection Newspapers in Virginia. His freelance writing has been featured in CityLab, Slate, Baltimore City Paper, DCist and elsewhere.
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