It's Your Money: The District's Money and You

People have asked me why the Metropolitan Water Reclamation District has an elected board of commissioners. It’s a good question. In most respects, the District functions as a utility — providing sewage treatment services and, more recently, managing stormwater — and many utilities have an appointed board, not an elected one. But that’s the way it’s been from the outset, and the District goes back a long way, to 1889.

One might also ask why the District is funded the way it is, supported mostly by property taxes,* not by fees for services as most utilities do. In my opinion, this funding structure is both good and bad. It’s a good thing because the District’s base of support is broad and stable — it includes nearly all property tax payers in Cook County — which the bond rating agencies like. As a consequence, the MWRD has three AAA bond ratings, setting it apart from most other government agencies in the state. Obtaining funding from property taxes also means the District doesn’t have to set rates (the Cook County Assessor does) or collect bills (that’s the Treasurer’s job).

But because the District’s operating budget comes from property tax assessments, it also means we don’t earn revenue in proportion to the services we provide, as many utilities do. When temperatures drop and people turn up the heat in their homes, their energy bills go up. When rains deluge Cook County causing the District to treat more stormwater — and thus incur greater energy costs – we cannot add a surcharge or pass the added costs on to Cook County consumers.

This funding structure also means we cannot charge businesses or homeowners less when, through water conservation measures, they send us less wastewater to treat. I consider this a structural perversity, and it’s something that we should consider for the future. How can we promote best practices, such as capturing rain where it falls and keeping it out of the sewer system, and provide incentives to those who send less water to the treatment plants?

The District’s 2011 budget decreased nearly 38 percent from the previous year, falling to $1.031 billion from $1.656 billion. The largest drop (approximately $590 million) comes from the District’s Capital Improvement Fund, which is used to finance major capital projects. In 2009, the District issued $600 million in Build America Bonds to support major capital projects, including work on 40-year master plans at our plants. With contracts for that work now awarded, the capital budget for 2011 was dramatically reduced.

Regrettably, the District is likely to face significant budget constraints for several years to come.

* The District does have a few other sources of revenue — income from leasing its lands, and from investments, sewer permit fees, and industrial user charges — but these are relatively modest.

For More Information

MWRD’s Annual Budgets are great sources of information not only on financial matters, but also for major policy issues, current initiatives, ongoing major construction projects, and more.

For those who want to take a deep dive into the District’s budget, read the 2011 Budget Book.

For a more concise overview, check out the 2011 Budget in Brief.