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As City Council haggles over several business tax increases Mayor Cherelle Parker has proposed as part of her $7 billion budget plan, members are also considering whether to endorse a new increase in water rates.
The typical water bill for a residential customer is already set to increase $7 per month in September. That will cover the rising cost of running the Philadelphia Water Department, as well as the growth of a program that reduces bills for low-income customers, called the Tiered Assistance Program or TAP.
A measure sponsored by Councilmember Jamie Gauthier would expand TAP eligibility to include households with incomes at 150% to 200% of the federal poverty level. To cover the resulting reduced payments, non-TAP customers would see an increase in their water rates.
“Expansion in this way is makes good sense to help fill that void for people who just aren’t quite as poor as their neighbors, but are still facing economic vulnerability and all of the cascading harms that flow from the loss of potential or potential loss of water service,” Community Legal Services attorney Robert Ballenger testified at a council hearing Tuesday.
About 2,000 households a year have their water shut off for non-payment, a PWD official testified.
The bill is sponsored by nine council members — enough to override a mayoral veto — but has faced pushback from the Parker administration over the cost.
During a committee hearing Tuesday, Gauthier tangled with city officials over the varying estimates for how many more families would sign up for TAP if the measure passes, and how it would affect everyone else’s bills at a time when utility rates and the cost of living are spiking broadly.
“The city of Philadelphia is responsible for… making water unaffordable, and we have chosen to let these policy failures continue for years,” she said. “This committee has a choice: we can wait for another rate hike, another inflated bill, another Philadelphian forced to choose between paying for water and paying their rent, or we can act.”
4,000 or 40,000?
The water bill for the typical customer is currently about $89 per month. The increases already scheduled will raise that by nearly $7 — $4.89 more to pay for PWD operations and capital investments, and $2.10 because enrollment in TAP has increased recently, officials said.
It’s unclear how much the proposed TAP expansion would cost, because it depends on how many more people enroll and how much they will be asked to pay, which has not yet been determined. The 60,000 households now in TAP pay fixed monthly bills of 2% to 4% of their income.
Estimates developed by Community Legal Services (CLS) for Gauthier and by the city’s Revenue Department agree that at least 4,000 more households will enroll if the program is expanded, because that’s the number in the 150-200% of FPL range who applied and were denied in the past.
That level of enrollment would reduce PWD’s revenues by roughly $2 million a year, which would be made up by increasing bills for 380,000 non-TAP customers by some small amount. An estimate was not provided, but it appeared it would come in well below 50 cents a month.
However, the two estimates diverge widely on the upper end. Considering the number of eligible households in Philadelphia and typical sign-up rates for utility assistance programs, CLS put the maximum likely cost of an expansion at $5.7 million.
The Revenue Department, meanwhile, found that many more people could participate — up to 40,000 households — and that they would use more water and get a larger discount than CLS projected. The higher enrollment could cost the utility as much as $23.5 million a year and result in a $3 monthly bill increase for non-TAP customers, the department said.
“As that grows, we have the challenge of maintaining sustainable funding for PWD operations, and as it’s currently structured, that funding is recovered through increased rates. So that’s really where the challenge is,” Revenue Commissioner Kathleen McColgan said.
Gauthier angrily criticized the administration, saying revenue officials had promised to provide her with the information behind their analysis but had failed to do so. She also dismissed the high enrollment projections as implausible.
“The administration knows there is no means-tested program in the city that has full 100% enrollment,” she said. “The whole argument is anchored by this $23.5 million number that is not based in any sort of reality.”
Relief for astronomical bills
The TAP expansion is one of three measures related to water costs that Gauthier introduced in November.
A second bill seeks to guarantee PWD will reduce extremely high bills — sometimes up to several thousand of dollars — that some homeowners have received after their water meters were replaced and it turns out they were underpaying for years. A third measure concerned renters who lose service or can’t sign up for TAP because bills are in their landlords’ names.
Gauthier described the experience of a constituent named Alexandra who bought a home and was initially assured by PWD that her water meter reading was accurate. After her meter was upgraded as part of the agency’s citywide modernization program, she received an $8,000 catch-up bill, the councilmember said.
“Even though PWD told her otherwise, they reversed course and said the old meter in Alexandra’s home had not been transmitting information for eight years,” Gauthier said. “As the new owner of the home, the city told Alexandra that she is responsible for coming up with eight grand, even though she did everything right.”
Water Commissioner Ben Jewell said the meter upgrade program will almost entirely eliminate estimated billing, which can be inaccurate and lead to underbilling, and he said PWD makes extensive efforts to catch billing irregularities and inform customers.
“While PWD and Revenue are striving for 100% actual meter reads, with over 500,000 water customers across the city, we recognize that occasional issues still arise,” he said. “When they do, some customers may experience unusually large bills, and it’s important that we address those situations consistently and equitably.”
Ballenger said the legislation is necessary because it can be very difficult for affected residents to get the bills reduced. On a number of occasions CLS lawyers have appealed on their behalf all the way to the city’s Tax Review Board before getting relief, he said.
“It’s infrequent, but it does happen, and I think these regulations are a really important way to ensure consistency in handling makeup bills in situations where there’s been a faulty meter, and also avoid the necessity of someone to really panic and have to search around for resources to help,” Ballenger said.
The committee voted in favor of the TAP expansion and water meter proposals, sending them to the full council for future consideration.
