January 00, 2007

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Towns could lose authority to set higher water, sewer rates for county customers; call your senator now

SB 1377 (Herring) prohibits towns from charging county water or sewer customers a higher rate than town residents under certain circumstances. The bill, proposed by Sen. Mark Herring of Loudoun County, is aimed at the town of Leesburg, but it applies statewide.

If the town has more than 1,000 customer connections outside the town's boundaries, it generally may not charge county customers more than town customers for water or sewer. There is some flexibility in rates if costs are higher in the county. The county may complain to the Commission on Local Government if it believes that the rates are discriminatory. A three-judge court hears the case and issues an order setting rates.

In many towns that supply water or sewer service, the original cost to build a plant and distribution lines was paid by the town taxpayers through property taxes or other town taxes. Even when revenue bonds are issued to help pay for distribution lines and other infrastructure, town resources paid for by general taxes -- including staff time and office space -- are often used.

Because town residents paid for the system, at least in part through general taxes, it is unfair to allow county residents to receive the same water or sewer rates as the town residents.

If the bill becomes law, town residents in some cases will end up having their water bills increased. The costs of expanding a water or sewer system are regularly financed by water and/or sewer rates calculated by the town to be necessary to pay for the expansion. The bill would disrupt that calculation. This would force towns, in some cases, to increase the rates for all.

Please call your senator on the Senate Local Government Committee by Tuesday at 9 a.m. to oppose this bill.

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