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APPROPRIATION COMMITTEE-ATM 2018
<br /> Article 18: Appropriate for Wastewater System Improvements
<br /> Funds Requested Funding Source Committee Recommendation
<br /> $1,800,000 Wastewater EF debt Approve (9-0)
<br /> This article addresses proposed capital expenditures to be made during FY2019 as part of a continuing
<br /> program to upgrade and keep current the assets of the Wastewater Enterprise Fund. For general back-
<br /> ground on the enterprise funds, and the relationship between the budget process and the water rate-setting
<br /> process,please see Appendix B and the discussion under Article 5.
<br /> A total of$1,800,000 is again requested this year: $1,000,000 as part of a multi-year plan to rehabilitate
<br /> sanitary sewer infrastructure, particularly in remote areas, including brook channels, where poor soil con-
<br /> ditions lead to storm water infiltration; and $800,000 as part of an ongoing program to upgrade Lexing-
<br /> ton's ten sewer pumping stations. The details of the projects including the expected work sites can be
<br /> found in the Brown Book(p. XI-13). Capital appropriations for similar purposes have been made in most
<br /> years (except for FY2006, when engineering studies were not ready, and FY2011, when only pump sta-
<br /> tion upgrades were performed).
<br /> The costs of this year's wastewater system improvements will be funded entirely by borrowing. Unlike in
<br /> recent years, due to a variety of factors, there are not adequate retained earnings to contribute to the fund-
<br /> ing of capital projects. The resulting debt service costs for the portion borrowed will be borne by the op-
<br /> erating budget for the Wastewater Enterprise Fund in FY2019 and for an additional ten years until the
<br /> debt is retired (see Brown Book, p. XI-13, Table III), and will be included each year as a component of
<br /> the wastewater rates. Part of the funding may come from MWRA grants or loans.
<br /> Prior to FY2006, capital expenditures for wastewater distribution system improvements were funded pri-
<br /> marily by enterprise fund cash capital, which was raised in the rates. Subsequently, there was a transition
<br /> to funding these ongoing improvements primarily with debt. While the transition to debt financing miti-
<br /> gated the need for rate increases early on, that change, together with the fund's allocated contribution to
<br /> the debt service for the new DPW facility, steadily increased the annual debt-service costs of the sewer
<br /> enterprise fund,both in dollar and percentage terms, as illustrated below.
<br /> Growth in Wastewater Fund Debt Service
<br /> Fiscal Wastewater Total Budget Debt Service
<br /> Year Debt Service Ratio
<br /> 2006 $275,950 $7,084,802 3.9%
<br /> 2007 $333,899 $7,440,920 4.5%
<br /> 2008 $439,792 $7,355,479 6.0%
<br /> 2009 $488,135 $7,643,649 6.4%
<br /> 2010 $575,357 $8,083,478 7.1%
<br /> 2011 $791,777 $8,315,556 9.5%
<br /> 2012 $879,713 $8,934,624 9.8%
<br /> 2013 $956,855 $9,282,077 10.3%
<br /> 2014 $1,131,673 $9,257,354 12.2%
<br /> 2015 $1,220,843 $9,517,618 12.8%
<br /> 2016 $940,679 $9,103,316 10.3%
<br /> 2017 $981,220 $9,441,980 10.4%
<br /> 2018 $1,034,904 $9,682,514 10.7%
<br /> 2019 $1,211,165 10,132,360 12.0%
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