PUB calls Winnipeg's utility rates a hidden tax

Manitoba's Public Utilities Board says it should be regulating how much Winnipeggers pay for water and sewer services saying the city's practice ofskimming millions from those services to general revenues amounts to a hidden tax.

The PUB held hearings last December tosee how the City of Winnipeg handles its water and sewer utilities.

'This represents a hidden property tax increase that should be made explicit and transparent.' Public Utilities Board report

Because of an exemption, Winnipeg is the only municipality in Manitoba where the PUB does not set local water and sewer rates.

Winnipeg's water and sewer utilities are in excellent financial health with combined surpluses of $1.6 billion as of December 31, 2010, the PUB said in its report, issued Thursday, based on those December hearings.

"The Citys water utility generated annual operating surpluses of $41 million in 2008; $25 million in 2009; and $21 million in 2010," the report noted.

"The Citys sewer utility generated annual operating surpluses of $73 million in 2008; $64 million in 2009; and $65 million in 2010."

Cross subsidy

Together, the utilities "cross-subsidize the citys general revenue fund by approximately $45 million per year."

This means that about 20 per cent of water and sewer revenue isn't used for water and sewer but ends up in the city's general coffers.

"This represents a hidden property tax increase that should be made explicit and transparent," says the PUB.

To ensure transparency and fairness, the board says, Winnipeg's exemption shoud be lifted and the board should be given authority to set sewer and water rates inthe Manitoba capital.

Existing deficits

If this occurred, the extra water and sewer revenues, rather than going into general city coffers, could be used "to significantly accelerate the removal of existing infrastructure deficits, including the separation of combined sewers (to reduce or eliminate raw sewage discharges into rivers) if such monies were kept and used in the two utilities."

Consequently, "it would be in the public interest for the Public Utilities Board to regulate the rates charged by these utilities."

But Winnipeg Coun. Dan Vandal, head of the city's public works committee, makes no apologies for using water and sewer revenue to pay for other things.

"I don't see anything wrong with the City of Winnipeg taking out a dividend from a publicly-owned asset to help pay for other public services on the other side, whether they be police, infrastructure or libraries or pools," Vandal said, adding he believes Winnipeggers prefer higher water and sewer rates over higher property taxes.

Not unique

Steve West, a spokesman for the city, said Winnipeg is not unique in drawing a utilities dividend to support other services.

He said Calgary, Edmonton, Regina, Toronto and Ottawa also draw revenue from their utilities.

But some customers liked the idea, at first blush.

Bakery owner Leslie Scaletta said her water and sewer bill is about $4,000 a year. Just last month, the city jacked up water and sewer rates by six percent.

"I'm thrilled. It's about time somebody did something about that," said Scaletta. "And I agree with what they're saying. The city has been taking our money. The infrastructure's definitely not being managed properly in our city."

Manitoba Local Government Minister Ron Lemieux said it's too soon to say whether the province would bring Winnipeg's utility rates under the utility board's jurisdiction.