Question: Regarding Oahu’s proposed sewer fee hikes, why can’t the wastewater division receive funding from the city’s general fund to offset the impact on customers? Is self-sufficiency required by law? If yes, which law? Or has this been the general practice, but not written in stone? Could ENV seek general funds from the city to offset this increase?
Answer: Numerous readers are asking about the city’s plan to raise Oahu sewer fees for the first time since 2016. Under the 10-year plan, the average monthly sewer bill for a single-family home would more than double, from $110.89 now to $248.53 on July 1, 2034, which reflects that “the wastewater (division) — the sewer enterprise, which is the collection system, the pump stations and treatment plants — is a self-sufficient entity. We only receive funds from sewer fees, we can’t receive funds from (the city’s) general fund,” Roger Babcock, director of Honolulu’s Department of Environmental Services, said in announcing the proposed fee hikes (808ne.ws/48AybpM).
We emailed ENV about the funding, as readers had asked, and Babcock provided the following response:
“The sewer fund was established to be self-sufficient to provide for all wastewater services like any other utility. Sewer funds are legally restricted to only paying for wastewater program expenses and cannot be used for other purposes such as police, fire, parks, rail, or anything else. There is no legal requirement that the sewer fund cannot receive funds from the City general fund (property tax proceeds). However, since established, the sewer fund has remained self-sufficient. The question posed presumes that the City general fund could potentially be tapped into over the next 10 years in order to reduce the proposed increases in sewer fees. This assumes that there are and will continue to be extra funds available in the general fund, both now and into the future. This is not a good assumption. Instead, it should be made clear that the use of general funds for the sewer enterprise would either require raising property taxes or cutting operating funds for other departments and programs such as police, fire, parks or others. It is not the intent of this administration to either cut programs or to raise property taxes at this time. Instead, it remains the intent that self-sufficient programs such as wastewater and drinking water remain self-sufficient.”
He cited Honolulu City Council resolutions and policies that address the sewer fund’s self-sufficiency.
Resolution 06-222, the Debt and Financial Policies of the City, 808ne.ws/4htCx6t, states in section I.A.D.5 that “the City shall maintain a sewer fee rate structure which is adequate to insure that the programs the sewer funds finance remain firmly and separately self-supporting, including the costs of operations, maintenance, and debt service; provided that this shall not preclude the use of community facilities districts, benefit districts, unilateral arrangements, development agreements, user fees and impact fees to pay for sewer capital improvements.”
Resolution 98-197, CD1, Debt and Financial Policies of the Wastewater System Enterprise (808ne.ws/3NVYVaN), says in Sec. II.C that “rates will be set at levels sufficient to generate sufficient revenues to ensure, after consideration of interest income and miscellaneous revenues, compliance with all applicable covenants to bondholders and to ensure that the revenues generated by Sewer Service Charges are sufficient to pay all operating, maintenance, debt service and capital costs, and to maintain sufficient operating reserves, without reliance on the City and County’s general taxes and other revenues.”
In addition, Babcock said, there are other considerations “such as commitments made in City general obligation bond documents that revenues deposited into the general fund be used to fund City services that do not include the wastewater program, and that general fund revenues are pledged to debt services for city services and projects that are not related to the wastewater program.”
See www8.honolulu.gov/env/sewer-fee-rates for more information.
Q: Didn’t the city just raise these rates?
A: No. You might be thinking of the Honolulu Board of Water Supply, which approved a more than 50% rate hike for fiscal years 2024 through 2029 that took effect in February. BWS provides water services, not sewer.
Write to Kokua Line at Honolulu Star-Advertiser, 500 Ala Moana Blvd., Suite 7-500, Honolulu, HI 96813; call 808-529-4773; or email kokualine@staradvertiser.com.
