Mount Airy water and sewer panel urges 8% annual rate increases to stop recurring deficits

Mount Airy, Md. — At the July 7 Mount Airy Town Council meeting, Vic Swanson, chair of the town’s Water and Sewer Commission, told the council the town’s water and sewer enterprise is running recurring deficits and recommended the council introduce an ordinance to raise user rates by 8% in the first year followed by 8% in each of the next two years.

Swanson said the enterprise fund is not operating on a breakeven basis and that “funds are routinely taken from reserves to cover costs that are not recovered through fees.” He said reserves fell by $1,589,000 — a 27% decline — between February 2022 and May 2025 and cited a $517,000 programmed deficit in the current budget. He also presented line items cited by the commission: annual operating costs of about $3,100,000, water and sewer capital costs of about $4,980,000, and recurring operating items including chemicals and utilities that the commission said contribute to the shortfall.

Why it matters: the town’s water and sewer utilities are operated as an enterprise fund and are intended to be self‑supporting through user fees. Swanson and commissioners said ongoing deficits reduce emergency reserves, limit the town’s ability to finance capital projects and increase the risk of service shortfalls in the event of large equipment failures.

Council reaction and next steps: Council members asked for additional planning detail before committing. Council member Demoter, who serves as a liaison to the Water and Sewer Commission, said any ordinance increasing rates should require a multi‑year operating and capital plan that explains how the additional revenue would be used and what performance or reporting the council should expect. Council member Kelly asked whether an across‑the‑board 8% increase would restore breakeven, and Swanson responded that the commission’s modeling assumed the increases would begin July 1 and projected a modest surplus by the third year but cautioned that surpluses can be drawn down again as costs rise.

Swanson also recommended creation of a multi‑year budget working group to set priorities, forecast capital needs and explore alternative water supplies. Town staff and council members said they would work with the commission and the town engineer to prepare an ordinance and the operating/capital forecast for council review and possible introduction at the next meeting.

Key figures and context presented to the council (as stated at the meeting): reserves declined $1,589,000 (27%) from Feb. 2022 to May 2025; the budget showed an aggregate water and sewer total of $8,112,000 (operating $3,100,000 plus capital $4,980,000); a programmed deficit for the fiscal year of $517,000 (6.4% of the total); several recent capital projects with costs cited (examples given include water tower repairs, pickup truck replacements and a wastewater sludge pump); and $300,000 per year cited for chemicals and roughly $300,000 per year for electric utilities for the systems. Swanson said a recent large project was paid from ARPA funds.

What council did: No ordinance was introduced or voted on at the July 7 meeting. The council directed staff to work with the Water and Sewer Commission and the town engineer to prepare an ordinance draft and a multi‑year operating and capital plan for council consideration.

Voices (selected): Vic Swanson, chair, Water and Sewer Commission; Council member Demoter, liaison to the Water and Sewer Commission; Council member Kelly; Mayor Hushauer; Barney (town engineer).