Inflation blamed for Westmoreland municipal authority cost overruns

Inflation led to an 11% increase in Municipal Authority of Westmoreland County expenses in March, and utility leaders said Wednesday they are bracing for more cost overruns in the months ahead.

“I don’t think prices will get cheaper, and we will continue to look at overages,” authority business manager Brian Hohman said.

The utility that provides water to more than 122,000 customers in Westmoreland, Allegheny, Armstrong, Fayette and Indiana counties and sewer services to nearly 30,000 homes and businesses said expenses exceeded budget projections by more than $1 million during the last month of the 2021-22 fiscal year.

About half of that overrun, $500,000, was caused by higher costs for paving materials, Hohman said.

Prices for chemicals, pipes and other supplies also have increased substantially during the past several months.

A preliminary accounting of expenses for the last year found the authority was $1.9 million over budget, officials said.

Overall, the authority balanced its budget in the past year with increased revenues from water sales but expects the growing costs could negatively impact the agency’s spending for the 2022-23 fiscal year, which started in April. In January, authority board members unanimously approved the $107 million budget, which included no rate hikes.

Hohman said there are no plans to increase water and sewer rates during the upcoming year.

“We’re hopeful that, despite increases in costs, we’ll still be able to maintain a sound budget,” Hohman said.

The authority last instituted a rate hike in 2017.

Officials said the authority will tap into its $27 million surplus to balance the books in the year ahead.