Environment and Health

Prohibition Against Reasonable Return on Sewer Rents

The Mandate: Currently, General Municipal Law § 94 authorizes a municipality to earn a "fair return" from the operation of a water utility service.  This means a local government may use the "profits" or surplus resulting from the operation of the water utility system for any municipal purpose.  However, this same authority does not exist for municipal sewer utility systems.  General Municipal Law § 453 limits the use of sewer fund revenues to expenses directly related to the sewer system including operation, maintenance, repair, construction and indebtedness.

The Cost: By not allowing a municipality to earn a "fair return" from the operation of a sewer utility system, the state restricts a local government's ability to use their resources in the most cost-effective manner, which only exacerbates the reliance on the local property tax.

The Solution:  Amend General Municipal Law § 453 to permit a municipality to earn a "fair return" from the operation of a sewer utility system, as is currently allowed with water utility systems.  Amending the law will allow local governments to excess sewer funds for any municipal purpose, potentially easing the financial burden currently facing local governments by allowing for the more economical delivery of municipal services.