The Board of Finance unanimously approved $240,500 in borrowing from the general fund to cover a shortfall in the sewer budget at its October 8 meeting.

Public Works Director Fred Hurley said they will be taking the users into account and the users “will not be overly burdened.” With the proposed 9% usage fee over five years and the $90 surcharge it will bring revenues and expenses in line.

The surcharge was the average of the 1,350 total users.

Hurley said in the past, the Water and Sewer Authority (WSA) was very cautious about raising rates.

“If they had raised rates on a regular basis, we wouldn’t be in this situation,” Hurley said.

Hurley projected between the borrowing and rate increases, the sewer budget would be even by the fourth year, and would have surpluses by the fifth year. He said not supplying enough revenue would “defeat the purpose of trying to get things back into balance.”

The issue the WSA is having is that they are not making enough money to cover their operational expenses. The projected budget for operational costs is $1,226,000, but the estimated revenue before the rate increase is $955,000. That leaves a $271,000 shortfall in the budget.

The last time the sewer usage rates increased was in 2022. The rate has stayed at $8.84 for two years, but with the increase the rate is $9.64. All Newtown residents that are on the sewer system will now be paying 80 cents more per 1,000 gallons of water.

When asked how the shortfall occurred, Hurley stated that a financial modeling company was hired 19 months ago to develop a cash flow model to be used to justify sewer use rate increases, but the work was ended in March because they “could not resolve many of our questions except to support a substantial sewer use rate increase for at least the next three years.” Part of the problem, according to Hurley, was the fact that the WSA had been asking the Finance Department if there were enough funds and were told “everything looks OK.” Hurley also states that expenses and revenues were “lumped into single accounts,” making it “difficult to monitor a current budget or project an operational budget.”

Finance Board Chairman Jim Gaston said it looked like “sloppy accounting.”

Once the shortfall was discovered, the contract operator was told to “reduce expenses,” Hurley stated. He said, however, that the town has a legal obligation to provide those services and can’t “close shop or suspend services.”

Hurley said he will “try and see it won’t happen again.”

“We’ll make sure to do our financing as well as we do our engineering,” said Hurley.

Editor Jim Taylor can be reached at jim@thebee.com.