At the Dec. 15 work session of the mayor and council, Acting Borough Manger Joanne Kwasniewski informed the governing body there is a $370,000 deficit in the water utility because of the wet summer and conservation efforts by both homeowners and businesses. Water utilities are required to be self liquidating, according to Kwasniewski, which is why the borough will probably have to raise rates from $4.50 to $5.50 per thousand of gallons of water. If the water rate raise is enacted, the average household will see an $18 per quarter increase on their water bill.Fair Lawn already has a water rate that is significantly higher than neighboring communities. Ridgewood Water is already trying to get higher rates, but Fair Lawn's rates are already some of the highest in the area.
The council is not happy about the possible water rate increase, but is even more distressed they just learned of the deficit. As soon as Kwasniewski informed the council of the issue, the governing body members wanted to know why former Chief Financial Officer (CFO) Barry Eccleston had not notified them sooner. While the problem probably couldn't have been avoided, steps to address it could have been implemented as early as mid summer, according to Deputy Mayor Joseph Tedeschi.
"We did not find out about this until December and this council is in for some heavy lifting. I'm not sure it could have been avoided. The CFO should have known if it was going to be a $370,000 shortfall at the end of November, as in June we were probably short about $150,000. He has a responsibility to keep us informed. Let's say it was September and he said 'I'm short $200,000,' we then could have implemented an increase that would have been less at the time," Tedeschi said.
So why are the rate hikes necessary? Increased conservation has meant less water consumed and therefore lower revenues that are in addition to the lower demands due to the recession and a wet summer that depressed summer usage. Moreover, there are issues with Fair Lawn's budgeting process that they didn't realize that there was going to be a shortfall sooner. Given the way that the borough has claimed that they were in a fiscally sound position, something clearly isn't right here.