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Lisa Blais: Providence Goes After Water, Homeowners To Fix Budget

Thursday, May 23, 2013


Providence's water users may be in for a surprise if a new water system bill is passed.

Here’s a story of political manipulation at the cost of RI citizens. (So, what’s new?)

Usually, legislation is introduced during the General Assembly session and may languish for quite awhile before a committee hearing is scheduled to consider a bill. But, House bill 6099 – a money grab for the City of Providence – was introduced on May 9th, scheduled for a committee hearing on May 14th and curiously postponed the very next day at the request of the sponsor, Representative Blazejewski. Will this bill come back at the last moment in the session or under a different bill number? Or, could it be that some people woke up to the fact that this water system bill isn’t in the best interests of ratepayers or cities and towns other than Providence?

House bill 6099 aimed to create the Ocean State Regional Water Authority, a quasi-public entity without any regulatory oversight. Ouch! The “idea” is to sell or lease the Providence Water Supply system thereby creating a revenue flow to plug the city’s budget deficit. Here’s the thing: Providence does not own the system - the ratepayers do. But, this legislation ignored that fact and intended to create a board with the authority to set the sale or lease price without any oversight or approval from the RI Public Utilities Commission or the RI Division of Public Utilities while fully knowing that the costs of a lease or sale would be passed on to Providence Water customers. House bill 6099 is an end-run around the regulators, and will result in a water rate increase that will be used to benefit the City of Providence to balance its budget.

The devil is in the details.

The proposed section 46-32-30(c) on pages 23 states in part: “..the public utilities commission and the division of public utilities and carriers shall not have jurisdiction or authority of any kind to direct, order, or require that the purchase payments or the lease payments be made to or inure to benefit, directly or indirectly, of the water ratepayers of the entity being acquired or leased by the authority.” (The emphases are mine.) This means the entire lease or sale cost will benefit the City of Providence.

It was the customers of the Providence Water Supply Board, not the taxpayers of the City of the Providence who paid for the investment in the system. In 1988, the Rhode Island Public Utilities Commission in Docket No. 1900 made a decision which stated: “Thus, it appears from the state of the evidence that the ratepayers, as distinct from the taxpayers of the city of Providence, have made the principal contribution to acquire the Board’s system”. The cost of debt for building the system and the cost for maintaining the system has been paid by water customers through their rates, and not by Providence taxpayers through their property taxes.

Just plain wrong.

Water customers in Providence, Cranston, Johnston, North Providence, Warwick , Coventry, West Warwick, East Greenwich, East Providence, Lincoln, Smithfield, Barrington, Bristol and Warren will all be adversely affected with rate increases in the range of approximately 10-17% (or higher?) if this legislation were passed.

But, Providence isn’t done.

Rarely do city officials make economic promises to our public sector employees with any consideration of the community’s ability to pay for those promises. So, in an effort to balance its own checkbook, as Mayor Taveras had recently remarked, Providence homeowners may be facing upward of a 24% property tax increase! While there was much fanfare in his ability to negotiate concessions with public sector retirees and obtain additional “in lieu of” taxes from the public universities, it is obvious his efforts were wholly inadequate. In other words, the homeowners are left holding the bag again. It is outlandish to think that the high property taxes burdening Providence homeowners may go up as much as 24% just because they don’t have the political clout to introduce any bills to provide more revenue to pay those taxes! Clearly, something is very wrong when taxpayers are last in the pecking order. A recent article in this very publication exposed the fact that renters are paying 30% of their income for their homes. That chunk of their income will likely increase given that property taxes are about to spike and those costs will be passed onto the tenants.

The result of this vicious cycle? Everyone will be hurting all while property taxpayers, who rarely experience a sharp and self-evident, across-the board improvement of city services delivered as cost effectively as possible, will continue to watch their taxes soar. And, all while our politicians collectively pat themselves on their backs as they prepare for the next election cycle.

Lisa Blais is a board member of OSTPA, a taxpayer advocacy organization in Rhode Island. 


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