Committee discusses using free cash to reduce proposed wastewater rate increase and refers transfer to full council

The New Bedford Committee on Finance received presentations and extensive questions on Monday about whether to use available wastewater retained earnings to lower a proposed FY2026 sewer-rate increase, and voted unanimously to refer a proposed transfer of $3,830,000 to the full City Council.

Attorney David Geratowski reminded the committee of the charter process: the City adopts a wastewater budget and then must set sewer rates within 14 days of that budget adoption to fund the enterprise. Justin (Deputy Commissioner, Department of Public Infrastructure) and finance staff presented budget projections showing a requested wastewater budget of about $35.6 million for FY2026, up from $31.7 million in FY2025, driven by higher consulting/engineering and regulatory compliance costs and some short-term loan interest.

Administration staff offered options for using free cash to reduce the proposed rate increase. The administration said the city has roughly $3.8 million in wastewater-related free cash available. DPI presented three illustrative scenarios: no free-cash infusion (a projected 16.7% rate increase in FY2026), a $1.85 million infusion (reducing the FY2026 increase to below 10 percent), and a $2.35 million infusion (the department’s recommendation, which would lower the FY2026 increase to about 7.8 percent and the FY2027 increase to about 9.8 percent). Staff said eliminating the FY2026 increase entirely would require about $4.3 million in one-time cash.

Councilors asked for additional detail. Questions included: how principal forgiveness and SRF availability affect the enterprise fund; whether general-fund subsidies could be used (legal counsel said a subsidy would require a general-fund appropriation and a pass-through to the enterprise); and the size and timing of reserve funds that will be freed when certain debt service obligations end in FY2027. Finance staff said approximately $2.3M–$3.0M in debt-related reserves will be released when the last bond payment is made, which would ease rate pressure in FY2027.

The committee voted 11-0 to refer the transfer of $3,830,000 from wastewater retained earnings to wastewater special projects funds to the full City Council (mover: Councilor Ryan Perera; second: Councilor Maria Giesta). Geratowski and staff emphasized that final rate-setting will follow the council’s adoption of the wastewater budget, which triggers the 14-day rate-setting window.

Votes at a glance: transfer of $3,830,000 to wastewater special projects fund referred to full council (mover: Councilor Ryan Perera; second: Councilor Maria Giesta; outcome: referred to full council, vote 11–0).

Staff said they would provide further details — including projected five-year burn-rate history and updated SRF/principal-forgiveness estimates — to the council before final rate action.