Lessons from the Allentown water controversies
The ongoing dispute between Allentown and the Lehigh County Authority over a deal that left neither side happy and customers suffering under rate hikes is a lesson in why some of us opposed the scheme at the outset.
Amid the conflicting accounts and swirl of numbers, a few simple facts stand out:
Then-Mayor Ed Pawlowski wanted to lease the city’s water system to the Lehigh County Authority, a move he said would generate revenue so they city could cover $150 million or more in out- standing pension obligations.
When you’re selling a kidney to pay for cataract surgery, you’re not making progress. That’s basically what the city did. The authority wanted to commit to a 50-year lease even while its own charter expired in 36. The proposal involved a split system of rates between city and suburban customers, always a dodgy proposition financially.
The warnings were clear enough that conservatives on the county board of commissioners, including me, warned the authority and the city not to do this. No set of financial plans, however wishful, added up to a deal that would not end in higher rates for a customer base still climbing back from years of recession and stagnation.
Now, the authority and the city are in court over rate increases for city residents. The authority is now claiming it was not made aware of the extent of costly repairs to water lines, and that it faced budget shortfalls. They now say the city had somehow inflated its billings to suburban customers to make the system look more financially solid. They had the books open for examination.
So an authority that fought for the right to buy a pig in a poke suddenly says it’s been cheated and expects the ratepayers, who had no say in this matter, to cover their loss.
While an arbitrator has dismissed the authority’s complaint, the skeptic in me says this is likely a pause in the legal battle, not its end. I predict more filings, more recriminations and a growing sense of betrayal by citizens who have been hit with precisely the rate hikes they were assured would not be needed.
It’s a perfect storm: Water bills are increasing dramatically and in 2018 Allentown alone spent more than $409,000 — over 125 percent of the city’s entire legal budget — fighting with the authority. This doesn’t count the LCA’s legal fees.
Who gets to pay for this mess and, what can we do to avoid dilemmas of this sort?
One of the answers is to accept the fact that, even when the request is urgent, “no” is not only a viable option — it might be the only one. While it’s true that hindsight is 20/20, we should keep in mind that there was a fair share of 20/20 foresight. Some of us warned about this. We need to face reality before succumbing to the impulse to find ways to say yes to situations that require a no.
The other lesson we must take away is that sometimes, the handing over of core functions of government to unelected agencies must depend on the underlying reasons. It was clear from the start that more than half a billion dollars of taxpayer-funded debt would be created without any discernible benefit.
This is not the lease of something that can be readily reacquired. The city had one water system. It’s not as if Allentown can build another. When you have something this big, letting it go shouldn’t be done lightly, nor for quick cash.
The lease or sale of a public asset needs to be an investment, not a transaction. It simply won’t do for leaders to sell off pieces of a municipality to cover a cash crunch. It’s one thing to go through the couch cushions looking for loose change to tip the pizza guy. It’s entirely another to sell the couch.
The city was paying for debts it had incurred long ago, and leasing to the authority allowed city leaders to avoid a city tax increase by passing along higher water rates to citizens.
They were avoiding responsibility and trying to escape the political consequences of their failures. That’s not good government. We can and must do better. Sometimes, it starts with saying no.