Taneytown council debates 5% water-rate cut as staff warns long-term utility funding is strained

Taneytown, Md. — A proposed 5% reduction in water and sewer rates that appears in the city's draft FY2025'26 budget sparked a lengthy exchange on May 12 as council members weighed short-term relief for residents against long-term funding needs for aging water and sewer systems.

City Manager Jim told the council the utility fund has surpluses accumulated over recent years but that the city still faces large projected capital needs. "I would suggest that our existing user rates are not adequate to cover the long term maintenance of the system," Jim said during budget discussion, noting an estimated $11.8 million in water and sewer projects projected over the next five years. He also said the city received roughly $4.67 million in ARPA funding used to pay for deferred utility maintenance.

Mayor Christopher G. Miller supported a temporary 5% reduction reflected in the draft budget, portraying it as short-term relief and a political choice that can be revisited. "I don't see the justification for not doing 5%... we'll readdress it in a year if we really need to," he said. The mayor framed the reduction as a one-year reprieve while staff produces a more detailed capital-improvement program and cash-flow projections.

Council members and the city manager pushed back on whether the reduction is sustainable. Staff said the utility fund has posted multi-year surpluses (Jim cited about $7.576 million over five years) but that the combination of recent capital borrowing and debt service, the need for PFAS/PFOA filtration and rising operating costs (chemicals, electricity) mean the fund might not be able to shoulder a prolonged revenue reduction without drawing down reserves.

Council discussion focused on these core points: - What the 5% reduction means now versus long-term solvency: proponents argued it is temporary relief with a one-year review; opponents cautioned continued underfunding could force larger future rate increases to catch up. - How much of the utility fund balance derives from benefit assessments tied to new development versus regular ratepayer revenue. Several council members and staff noted that some prior surpluses were boosted by benefit assessments tied to recent housing development, not recurring user-rate income. - The pending PFAS/PFOA treatment issue: staff said the city is anticipating an award for filtration funding but that ongoing operating costs for filtration media will increase annual expenses.

Public comment echoed the debate: resident Alex Kelly ran through the municipal numbers and urged the council to focus on clearing legacy debt so future rate decisions start from a cleaner fiscal position. Kelly noted, "with a 5% reduction, if a consumer uses 10,000 gallons, that's only a $10 decline in their bill," and urged the council to weigh where reductions would do the most good across the community.

Outcome and next steps: The council introduced the water-and-sewer ordinance for rates with instruction to staff to adjust the ordinance to reflect the 5% reduction already budgeted. Council also asked staff to produce a draft capital improvement program and multi-year cash-flow projections to be presented at a new annual water workshop that the council asked to codify in ordinance. The mayor and staff indicated the rate change would be re-evaluated after one year at that workshop.

Ending: Council members asked staff to circulate detailed surpluses, projected debt-service schedules and the capital-improvement program ahead of the water workshop so the council and public can review the numbers before any final rate adoption.