Liu Says Water Rate Hike May Have Been Due to Accounting, Low Revenue Forecasts

An audit of the city’s water and sewer system by the city comptroller’s office found that accounting issues and low forecasts of revenue may have led to increased water rates.

City Comptroller John Liu’s audit also found that the city’s Department of Environmental Protection failed to collect a total $27 million in delinquent water and sewer bills.

“The results of this audit indicate that rising water rates may have soaked New Yorkers more than necessary,” Liu said. “DEP and the Water Board need stronger accounting of their revenues so that they can keep any rate increases to a minimum.”

In a statement, the DEP said it disagreed with the findings of Liu's audit.

“We made clear to the comptroller that we disagree with the findings and conclusions of the audit before it was released," the statement read. "The reasons for that disagreement are clearly stated in the letter we submitted that was published with the audit. They have not changed."

Every year, the city’s Water Board and New York City Municipal Finance Authority forecast the amount of surplus revenue that the DEP will collect from water bills, which goes toward paying for its debt obligations.

During the past four fiscal years, forecasts were extremely conservative for their surpluses, which may have caused rates to be set increasingly higher, Liu’s audit found.

However, when revenues came in, the actual surpluses exceeded the original estimates by anywhere from 24 to 41 percent in amounts ranging from $71 million to $120 million each year, the audit discovered.

Liu said that even as revenues from water bills were publicly underestimated, the NYW put the increasingly higher surpluses toward its projected debt obligations.

The NYW appears to have never considered whether the higher than budgeted surplus revenue could have been used to limit water rate increases, the comptroller said.