SADOW: Monroe Must Try Harder to Avoid Big Rate Hikes

Monrovians will have to bite the bullet – and very hard and big – over the water, sewerage, and waste disposal fees coming their way in May, which didn’t have to be this hard or big.

Next week, the City Council is expected to ratify an ordinance that will increase these costs by nearly $300 annually per ratepayer (assuming a typical average usage of 4,000 gallons monthly for water and sewerage by a city residence). Water rates will rise 7 percent, sewerage rates will jump by 45 percent, and garbage pickup costs per month will mushroom 87.5 percent.

Impetus behind the move comes from the city’s debt covenant for water, which requires it to have revenues of 125 percent of the principal and interest, federal and state law regarding funding for sewerage, and market forces with garbage collection. It makes for necessary ratepayer evils, but getting slammed all at once and at this level didn’t have to happen.

The water fee increase could have been softened. A previous ordinance would have adjusted rates automatically for inflation, but one of the Council’s first actions in 2024 with two new members was to repeal that. Independent Mayor Friday Ellis earlier last year had asked for a 2.7 percent increase that would have evened out the blow, but the Council majority of Democrats rejected this attempt.

And, waste collection could be done more efficiently by the private sector, leading to lower ratepayer costs. Ouachita Parish and the local governments within it either require property owners to contract privately for disposal or they provide it with a contractor, with Monroe being the outlier in doing its own garbage collection. In fact, about four-fifths of all local governments nationwide contract their services to a private provider.

In stumping for the hikes, Ellis said the waste fee increase came because of private sector competition, and speaking of all rates, claimed Monroe’s were as low as or lower than those in the area. That might be true until May, but with the increases compared to West Monroe’s fees, water will be about 3.5 percent higher and waste will be over 80 percent higher, although at higher volumes sewerage would still be more expensive on the west bank.

It would appear to make more sense that if you can’t beat them, join them: privatize waste collection (which was supposed to come before the Council at one point, but never made it onto the agenda) and at the least bring in outside management to deal with water and sewerage that probably will cut costs there as well. However, both moves would also cut city jobs, and the Council Democrats appear to have little appetite to see that occur.

If city elected officials don’t have the courage to do that, then a return to the fee escalation ordinance is in order for water rates. There is good logic in pushing rates up only when clearly needed, in that if built-in increases significantly surpass required revenues–especially given that the bonds do not extinguish until 2049, meaning the covenant will remain in force for some time unless the bonds are paid off early–government ends up taking too much of the people’s money too quickly. Yet at the same time, rating agencies that assess city debt grow nervous when revenue targets aren’t met and downgrade its bonds, which in turn can elevate future borrowing costs.

Hopefully, when this ordinance passes, agencies will upgrade city borrowing with the covenant fulfilled, but it would be better to avoid a yo-yo effect, which the current piecemeal approach to rates takes. And, policy-makers can commit (and voters hope to trust them on this) to lowering rates in case automatic increases take too much. The goal should be to make for gradual increases, avoiding the sticker shock that ratepayers will experience later this spring.