MAWC: No rate hike planned as inflation continues to impact authority spending

Rising energy costs and anticipated price increases for chemicals has left the Municipal Authority of Westmoreland County with a $4.5 million budget gap seven months into the 2022-23 fiscal year.

The increased expenses will require the water and sewer authority to dip into the agency’s financial reserves to balance its next budget, slated for approval in January, officials said.

“There is no rate increase planned,” said authority business manger Brian Hohman said as he introduced a draft budget to board members this week.

Final budget numbers are to be determined, but officials said the overall spending is expected to be covered using the authority’s $25 million surplus rather than seeking additional revenue through water and sewer rate hikes.

The authority last raised water rates in 2017, a culmination of three consecutive years of increases that totaled 39%. Those rate hikes were leveraged to pay for more than $150 million in borrowing finalized in 2016 to pay for capital improvements to the water and sewer systems.

No additional borrowing is planned for the upcoming fiscal year, Hohman said.

“We’re continuing to do capital improvements thanks to the board’s foresight in borrowing money when they did. That money is still in place and is sustaining our capital improvement projects today,” Hohman said.

MAWC has more than 122,000 water customers in Westmoreland, Allegheny, Armstrong, Fayette and Indiana counties. It also operates municipal sewer systems in the region that service nearly 30,000 customers.

Inflation has impacted authority finances. Hohman said expenses for this fiscal year that started in April are nearly 7% over budget. Energy costs are currently about $3 million over budget, while chemical purchases have cost the authority about $1.5 million more than anticipated, Hohman said.

Revenue increases of more than 6% through November have helped to offset the additional spending, but officials anticipate having to dip into the authority’s surplus account to balance the budget.

“We’ve had a successful, good 2022, even with our expenses going up,” authority board Chairman Randy Roadman said.