Reference no: EM13986716

We don't need to expand the water system. It'll only encourage more people to come here, and the town's big enough already.

A longtime resident Come on! It's progress, and you can't stop progress. There's lots of room for expansion here, and it's a lovely area. One way or another people will find a way to move here. If we don't build the new water system, they'll dig their own wells, and if enough of them do that the whole water table could drop.

A local developer

When I applied for my liquor license a few years ago, and presented my business plan to the Board of Selectmen, they assured me that my assumptions about the town's population growth were reasonable. I assumed there would be about 30 to 35 new homes a year. Are you now going to tell me that I should close my doors?

A local restaurateur

What about the cost? It's a lot of money, and somehow I just know that we'll all end up paying for some of it even though we're told that the new users will pay the whole bill. Are you willing to put your money where your mouth is and help pay for it?

Another longtime resident

Wait a minute. I'm willing to pay for my use, which I already do and to a pretty hefty tune. But you're right, only new users should pay the expansion cost. Besides, a chunk of our property tax goes to support the cost of the water system, which, by the way, I don't think is right. Property taxes should be used for those services where you can't charge people, like public safety.

Owner of a local bed and breakfast

Well, I think I can buy the progress bit, but how do we know we don't have enough capacity for five or ten more years. Maybe if we installed water meters and charged people for their actual use, they wouldn't use as much water. Everyone seems to think water is a free resource, but it's not. And even if it were, sewage treatment certainly isn't free.

A Town Selectman

The September 2005 Levinton Town Meeting was certain to be contentious. The views above reflected the wide range of opinions about the proposed $3 million expansion of the town's water and sewage system. The

Assignment

1. As a philosophical matter, without reference to any numbers, what sort of cross-subsidization, if any, is appropriate in a water and sewer system? Be sure to address, as a minimum, whether new users should subsidize existing users or vice versa, whether taxpayers should subsidize the overall cost of the system, whether people with pools and large lawns should subsidize (via the inclusion of sewerage in the overall rate) people who do not have these features.

2. Assuming the $3 million bond issue is approved, and that the current usage and fee trends continue, prepare a forecast for 2007. Make assumptions where necessary. If you make reasonable assumptions, this budget will show a deficit.

3. Assuming you want to eliminate the deficit, how would you change the fees and subsidies? As part of your answer, address whether the general tax support should remain, and whether the earnings on the sinking fund should be considered as revenue of the Municipal Services Department.

4. Given your above decisions, forecast what will happen to the surplus or deficit in 2007-2009, when there is debt service on the two bond issues. How would you eliminate a deficit during this three-year period? What will happen in 2010 and beyond, when there is debt service only for the second bond issue?

5. Given all of the above thinking, prepare a proposed solution to the issues on the table, that, if presented at the town meeting, would be the magic bullet that everyone is seeking.