Water and sewer rates will almost double in this Middlesex County town. Here's why

MILLTOWN - The price of water may be boiling over in the borough. Borough residents and businesses will see a 90% spike in water/sewer bills at least in the fourth quarter billing to offset a $344,000 shortfall.

The increase equates to $150.25 per household, borough officials said.

If the increase had been effective Jan. 1, it would have meant a 22% increase spread over the year, but since the shortfall has to be erased in one quarter, the increase for the quarter will be 90%, officials said.

How the borough will deal with the increase in water and sewer costs in the future remains to be seen.

"We've all said up here that we need to work over the next three months to adopt the rates that set us on the right path for next year," Council President Richard Revolinsky said.

"What those look like at this time I can't say," he continued. "We need to look at the projections, but we need to generate the revenue."

If the increased rates expire on Dec. 31 and revert to the prior rates, the shortfall in the water-sewer budget for 2025 would be estimated at $500,000 to $600,000, Milltown Chief Financial Officer (CFO) Joseph Zanga said.

Under a 2018 ordinance, the minimum quarterly rate for water usage between 0 and 7,500 gallons was $61.30. Under the recently approved ordinance, the minimum quarterly amount jumped to $116.89.

Under the previous ordinance, the minimum quarterly sewer charge for between 0 and 7,500 gallons was $104.67. The new rate is $199.33.

The rate changes were approved at the June 24 Borough Council meeting. Revolinsky, along with Councilmen John Collins and Frank Manco voted yes, and Council members Gary Posnansky, David Potter and Felipe "Phil" Zambrana voted no. Mayor George Murray broke the ties on both ordinances, voting yes.

Zanga said after taking over the CFO position at the end of April, he immediately started reviewing all the operating funds beginning with water and sewer. He found the $364,000 shortfall.

The only options would be to generate revenue somewhere else or cut expenses by $364,000, he said.

Revolinsky said the 2023 budget shows a $364,612.91 American Rescue Plan grant applied to the utility budget.

He said there probably would have been an increase in the rates last year if not for the grant.

Zanga said he also noticed that the cost of purchasing water and sewage treatment from New Brunswick was going up significantly.

Last year, the borough signed a six-year contract with New Brunswick Water with the rates going up 3% annually, but failed to to pass those costs on to ratepayers, Revolinsky said.

The problem this year is that the borough only had one quarter to generate $344,000, Zanga said.

The only way to guarantee revenue was to increase the facility charge or the minimum charge.

"That's what we decided to do," he said.

"While we may have noticed this six months ago, this has been going on a very long time," Revolinsky said.

In 2018 rates were raised 30%, he said, adding that the dollar amount was about $300,000.

"The surplus that was generated by that increase was then used to offset any additional costs over the next five years," Revolinsky said.

He said the borough raised rates and generated some extra surplus, but instead of staying on top of it and raising it as costs go up, the borough did nothing.

"Those costs then catch up and here we are with a big increase five years later and it's not the way we should be doing business," Revolinsky said. "There should be a continuous incremental increase to keep up with the cost of expenses."

Former Councilman Joseph Pietanza asked why the borough can't send a separate bill of $150 per household instead of raising the rates, which are not going to come down.

Revolinsky said it would cost the borough more than $10,000 to send a separate bill and the borough did not want to incur an additional cost.

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Pietanza said the ordinance should be amended to make the increase temporary until fiscal 2024 is satisfied.

Revolinsky said the $350,000 is reoccurring every year, adding the borough will most likely need more money than that because costs will go up.

Piatanza said the increase will mostly affect minimal users like senior citizens and single-person households.

But Revolinsky said the increase impacts everyone equally.

Borough resident Randy Ruth said he was concerned the rate hike undermines the credibility of the borough's management.

"This delay has left us scrambling to handle a crisis that we were told has been looming," he said. "This approach undermines trust and raises significant concerns about the transparency and foresight within our council."

He urged the Borough Council to consider not just the immediate shortfall, but also the broader implications of how the borough plans and communicates with residents.

Email: sloyer@gannettnj.com

Susan Loyer covers Middlesex County and more for MyCentralJersey.com. To get unlimited access to her work, please subscribe or activate your digital account today.