Mayor Brian Bowman and his executive policy committee want Winnipeg taxpayers to believe the main reason city hall is jacking up sewer and water rates is to pay for expensive infrastructure upgrades.

In fact, nothing could be further from the truth.

The chief reason, and maybe the only reason, the city is raising rates by an average of 8.5% a year over the next three years is to siphon hundreds of millions of dollars from the sewer and water utility into city hall’s general revenues, mostly to pay for the city’s out-of-control salary and benefits costs and its bulging bureaucracy.

According to the city’s 2016 to 2018 sewer and water rates report that was approved by EPC Wednesday, the city plans to take a staggering $416 million from the utility over the next 10 years and dump it into general revenues.

That’s an incredible amount of money.

In 2016 alone, the city plans to raid the utility to the tune of $32.2 million. Next year they plan to take $35.6 million. Every year the rates go up, city hall gets a bigger cut.

In other words, taxpayers are not paying more to finance upgrades to sewer and water treatment plants or to start fixing the city’s combined sewer system. That’s the political spin Bowman and EPC members are trying to sell. The reality is, they’re jacking up rates to pad the city’s general revenues and they’re not being open and transparent about it.

In 2011, under former mayor Sam Katz, the city approved a plan to take “dividends” from the sewer and water utility. The plan was to charge the utility 8% of gross revenues. At the time it generated about $17 million a year. They didn’t advertise it and they were loath to make the connection between higher rates and the new dividend.

It was a way of raising taxes without appearing to raise taxes.

And then along came Bowman, you know, Mr. Openness and Transparency, and within months of being sworn into office he and EPC raised the dividend. The city would now take 12% of gross sales from the utility and dump it into general revenues. Suddenly, the city began scooping up over $30 million a year from the sewer and water rates Winnipeggers pay.

City officials tell us other cities do this, too, so somehow it’s supposed to be OK. Not that it should matter what other cities do because I’m pretty sure we can make our own decisions in Winnipeg. But just for the record, Saskatoon doesn’t take a dividend from its sewer and water utility, Regina takes one but it’s much lower – 7.5% – and Edmonton takes a 10.9% cut.

Here, city bureaucrats call the dividend a “return on investment” from the utility, an odd and entirely inappropriate term considering a city utility isn’t a financial instrument politicians are supposed to get a “return” from. These are government entities that provide a public service to the community. They should be self-financed and cost effective. But they shouldn’t be cash cows for Bowman and city council to use for whatever they want.

Unfortunately, that’s what they’ve turned this utility into.

If city hall stopped taking the dividend today, the sewer and water utility would have an extra $30 million a year for operating costs and infrastructure projects, and rates would not have to go up.

Instead, every time city council raises sewer and water rates, city hall gets another windfall.

When Bowman and EPC members speak publicly about sewer and water rate increases, they rarely – if ever – talk about the dividend. They don’t want to talk about it. In fact, they would prefer if people didn’t know much about it.

Instead, they try to create the perception that the only reason rates are going up is to pay for infrastructure upgrades, which is factually incorrect. And it’s dishonest.

Sewer and water rates should be used for sewer and water costs only, including operating and capital expenditures. They should not be used to pay for city hall’s out-of-control spending.

This is a gouge.

And city council shouldn’t approve it.





Annual “dividends” from sewer and water utility to city hall’s general revenues, 2012 to 2018:

2012: $17.9 million

2013: $19.3 million

2014: $20.0 million

2015: $30.7 million

*2016: $32.2 million

*2017: $35.6 million

*2018: $38.2 million

*Years 2016 to 2018 are estimates

Source: City of Winnipeg sewer and water rate recommendations 2016-2018

TBrodbeck@postmedia.com

Twitter: @tombrodbeck