It’s a myth that municipal spending is out of control – but anyone glancing at the budget of Toronto Water could be forgiven for thinking it was.
Not only has your water bill gone up 9 per cent yearly since 2004, but that rate will keep rising well into the next five years and perhaps beyond. Expenditures in that department, unlike in others that are cut, frozen or held to a 1 or 2 per cent increase, will far exceed that 9 per cent.
Welcome to the strange world of our water economy.
Here’s the dilemma: while other departments use debt to finance large repairs or enhancements, Toronto Water has a mandate for a full user pay system: your water bills pay for operating and capital costs. It’s provincial law: water management has to be funded from the rate base, not through general tax revenue or borrowing.
The good news/bad news is that the better we are at conserving the earth’s precious H2O reserves, the less cash flows into our water system. As people become more efficient in their use, and industrial production (which consumes a lot of water) continues to decline, the volume of water used decreases by about 1.5 per cent per year, a loss to the budget of $15 million annually.
This occurs despite population growth. Call it a gift to the planet but a bust for the budget, since Toronto Water is the city’s largest user of electricity, needed to treat and pump millions of litres of water. And expect residents to get even more vigilant as the last 80,000 homes finally get their water metres installed.
So what’s fuelling Toronto Water’s budget expansion? For one thing, the department has a mammoth mandate. Some think their water bill mainly pays for the liquid that comes from the tap or shower, but the reality is that Toronto Water protects watersheds, cleans beaches, manages flooding, naturalizes rivers, maintains sewage treatment and more.
The sheer volume of repairs and improvements has doubled and now stands at $610 million per year, a lot more than the $380 million spent on operating the system. In some years the department stockpiles cash, but currently it has been spending more than it takes in.
The law that encourages limiting funding sources to user fees came about as a result of the Walkerton Inquiry, which determined that under-investment and poor oversight contributed to death and illness from contaminated water.
Likewise, increasingly tough health protection standards have forced upgrades to water and sewer plants, like the expedited move to remove hazardous lead pipe connections that added tens of millions of dollars to Toronto Water’s budget.
Of the 60 per cent of your water bill that funds large-scale upgrades and repairs, a good chunk goes to rehabilitating our thousands of kilometres of water mains and sewers, many of which are over 80 years old.
Even with 9 per cent increases, over $1 billion of work remains unfunded, including hundreds of millions needed for LRT projects and waterfront development. The Lawrence Heights Toronto Community Housing redevelopment alone will cost Toronto Water $70 million.
But the department, under these pressures, is making some big mistakes. It’s planning, for example, to allocate $151 million to the rehabilitation of the Highland Creek sewage incinerator, seemingly against council’s direction to work toward recycling human waste.
Beyond that, Toronto Water is preparing for climate change too slowly. It plans over the next couple of decades to spend $1.2 billion (in 2011 dollars) to control wet weather flow. Our sewer system combines rainwater and sewage. During heavy precipitation it gets overloaded, and raw or poorly treated sewage goes into the lake. The next move is to install large underground retention tanks that can hold runoff.
But the expected storm intensity increase over the next 25 years as a result of climate change will hit us hard, and flooding and washed-out bridges could become habitual.
Climate change adaptation will be expensive, but the department is being short-sighted in shying away from projects that aren’t about hardcore infrastructure, like tree-planting – one tree can suck up tens of thousands of litres of rainwater.
Other failures: a reluctance to acquire vulnerable creekside property slowing the downspout disconnect program removing $127 million from basement flooding prevention. There’s certainly trouble ahead, and those 9 per cent increases aren’t going to go far.
news@nowtoronto.com
