Framingham Foresees Yearly Water, Sewer Rate Increases Until 2032

FRAMINGHAM, MA — Framingham business and property owners may be in store for more than a decade of annual increases, according to officials, after the water and sewer department ran into a deficit this year.

During Mayor Yvonne Spicer's weekly community hour on Tuesday, city Chief Financial Officer Mary Ellen Kelly gave an overview of structural deficit problems in Framingham's water and sewer funds, and possible solutions to them.

Kelly described two key problems that came together to create a $1.5 million deficit in fiscal year 2020: In recent years, Framingham has been using the water and sewer department's yearly surplus to offset rate hikes. There was no rate hike in 2020, and increases in previous years have been between 2 and 4 percent. When the pandemic hit, businesses shut down, severely cutting into water and sewer revenue, leaving the department in a deficit — and with no savings to cover it.

"So, we come to a point where we come to a pandemic, and we're not as resilient in the water and sewer fund as we are in the general fund," Kelly said during the community hour.

Framingham is also projecting a $2 million water and sewer fund deficit in fiscal year 2021. Adding the deficits between fiscal years 2020 and 2021, the city is on the hook for $3.5 million, and the state is requiring $2.5 million to be paid off this year.

Along with items like refinancing debt and updating the rate structure, rate increases will likely be necessary to keep the water and sewer fund from going into negative territory in the future, Kelly said.

Spicer's administration told a City Council subcommittee on Jan. 21 that a 12 percent rate hike — about $25 per quarter for the average user — may be necessary starting in July. Kelly said Tuesday residents could expect increases between 1 and 4 percent between July 2023 and 2032.

Complicating the matter, the state revenue department will not certify Framingham's 2021 tax rate until the $2.5 million water and sewer fund deficit is resolved. Spicer and the City Council have clashed over a solution so far, preventing tax bills from being sent.

Spicer wants the Council to use free cash reserves to pay off the $2.5 million that's due this year. Councilors have balked at that solution since Framingham already spent $6.2 million in free cash to plug holes in the general fund, leaving reserves at around $8.2 million. If elected officials do not reach a solution, the state will add the deficit to the tax bills, which means property owners will pay about $84 more on average.

The Council will continue discussions on a fix for the short and long-term water and sewer deficits at a future Finance Subcommittee meeting.