Two weeks after Baltimore voted to raise its utility rates, the city’s comptroller and a longtime water management consultant say the increase was a long-time coming.

At meetings leading up to the Baltimore Board of Estimates’ Jan. 22 vote to authorize widespread rate increases, Comptroller Bill Henry and other officials maintained that the city had neglected critical maintenance of its wastewater infrastructure for decades. When the Department of Public Works (DPW) first proposed its 29% utility rate increase over three fiscal years in December, Henry implied the public needed to shift its expectations surrounding the cost of water.

“Instead of thinking of the good old days when water was cheap, they need to think of them as the bad old days where we weren’t paying what we should have been,” the comptroller said at the time.

Henry explained that much of the city’s water infrastructure was built in the early 20th century as people began to transition away from using private septic tanks. In 1991, Maryland Gov. William Donald Schaefer — previously a 16-year mayor of Baltimore — introduced a state enterprise fund for economic development, but Henry says much of the enterprise money allocated for the city was spent on other projects such as office buildings, libraries and schools.

“These were all good things that the people wanted and needed, and nobody was really worried because all the water and sewer infrastructure is underground. You can’t see it deteriorating,” Henry said. “And the problem is all of that infrastructure has like a 75- to 100-year lifespan.”

Henry noted that, during Mayor Brandon Scott’s first term, the city approved some modest utility rate increases to keep up with maintenance costs. But as record inflation led to a spike in the cost of wastewater treatment chemicals, DPW was put in a difficult position.

“Unfortunately for the Department of Public Works, not only did we stop increasing rates so much, but at the same time, inflation spiked,” Henry said.

Ed Donahue, a retired management consultant with 50 years of experience in financial planning for water and sewer utilities, says the factors that drive these decisions are inherently political because utilities are not legally allowed to make a profit at their customers’ expense. The issue of utility maintenance requires decades of planning and foresight, but officials tend to focus only on the “long term” of an upcoming election, Donahue said.

“When the guy who’s director of Public Works goes and says, ‘Well, we need to raise our water and sewer rates 12%,’ the [Board of Estimates] looks at one another and says, ‘Oh, we can’t possibly raise them more than 5%,’” Donahue said. “Then the director of Public Works says, ‘yes sir,’ and they raise it 5%. And what happens to the other 7% is, it’s just maintenance they don’t do.”

Donahue added that utility finances differ from property tax revenues because municipalities must collect the exact revenue needed to operate the utilities instead of considering requests from various agencies seeking funds for their spending priorities.

Donahue was a principal author of a 2021 comprehensive business review of the water and sewer use agreements made between Baltimore City and Baltimore County in the 1970s. The agreements allowed the then-smaller county to use city-owned water infrastructure at discounted rates.

“When these big investments were first made … 80% of the usage was in the city and 20% was in the suburbs,” Donahue said. “Now, Baltimore County uses more water than Baltimore City, but Baltimore City still owns the treatment plants and the reservoirs.”

Several residents who opposed the rate increase on Jan. 22 expressed a desire for the city to make county residents pay more for their water usage. At that hearing, Henry said the city’s attempts to renegotiate the agreements failed because the county wanted control of its infrastructure in exchange for making residents pay more.

Donahue balked at this thinking, arguing the city should welcome the chance to collaborate more closely on water issues with Baltimore County and other surrounding counties.

“I have no idea why the city is so opposed to a regional water and sewer system because the city’s never gonna make a profit on it. They’re always gonna be struggling to cover their costs [and] they’re always gonna be defensive about rate increases,” Donahue said.

Donahue concluded that any easing of rate increases is unlikely for the near future of Baltimore City.

“I don’t see any way out of continuing large rate increases for continuing large water and sewer rate increases for the city … They’re doing so much catch-up work to bring facilities [to] the condition they should be in and [cover] the costs they need to operate them properly.”

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