By Brian Shane

Staff Writer

Worcester County officials have proposed raising water and sewer rates as a possible solution to balancing the county’s water and sewer district budgets, which have run at a deficit for years, relying on comingled reserve funds to cover losses.

The operational deficit, affecting seven of the county’s 11 independent sanitary sewer districts, was only discovered last fall by county leadership, who now find themselves in a “fund-finding, troubleshooting phase,” said County Administrator Weston Young.

“We’re not out in front of this like we probably should be. The fact of the matter is, many of these service areas have not been paying for themselves,” he said.

New revenue is needed to cover a system-wide operating deficit of $2.1 million for fiscal year 2026. Young said this could be covered by rate hikes, transfers from the general fund, a use of prior year surplus funds, grant awards, or some combination thereof.

“The initial thought was, you take that $2.1 million and you divvy it up over, say, the 18,000 ratepayers and then in a quarterly bill, that’s probably a $32, $33 addition. That is one way of doing it,” Young said.

He emphasized that this particular rate hike proposal is one potential approach and isn’t a final decision.

The matter will be up for discussion before the Worcester County Commissioners at a May 6 public hearing. The commissioners already held a public hearing on this issue in December, where the public did express some frustration with the prospect of higher bills.

The commissioners were briefed on the rate hike proposal at their March 18 meeting in Snow Hill. User rate increases, which would vary across the county’s 11 service districts, are intended to cover the operating deficit, according to Quinn Dittrich, the county’s enterprise fund controller.

“We took the budgeted FY 26 expenses and looked at the service areas as a whole and applied the expenses to the ratepayers,” he told the commissioners.

Here’s how the finances are supposed to work: Water and sewer operations are considered “enterprise funds.” Each is separate from the county’s general fund and is designed to generate its own revenue and to break even. Some enterprise funds generate a budget surplus and can set aside money in reserve.

However, it was discovered that a majority of sanitary sewer service areas were not generating enough revenue to cover expenses and ran in the red for years. The districts have occasionally dipped into each other’s reserves to cover costs – Young made the analogy to an IOU on a Post-It note – but historically, they repaid these loans.

However, one service district in particular, Riddle Farm outside Berlin, went deeply in the red when its aging physical plant became inefficient at treating wastewater. That sludge was trucked to the Ocean Pines wastewater treatment plant at a cost of $532,000 annually.

“Somebody made the call to pump and haul,” Young said of Riddle Farm, “because it was cheaper to fix the problem at hand. The entire time, from a public works standpoint, it wasn’t treated effectively. They said, ‘let’s just take our sludge and treat it elsewhere’ – and that’s not free.

“The downside is,” Young continued, “the rates never change. The folks who use water and sewer in Riddle were paying the same amount, but it costs more to operate. Every quarter, every year, Riddle is going further and further in the hole. At a certain point, the comingled reserves would run out.”

Young also said, if money was needed for improvements, the individuals overseeing wastewater plants were supposed to formally request for an overage in expenditures from elected officials. Not only did that never happen, Young said, but the IOUs and comingling continued for years.

The commissioners last fall were briefed that many of the enterprise funds were in debt. That led them in February to authorize a $9.2 million transfer out of the county’s general fund to cover the shortfalls through the fiscal year. Some of it was designated as a grant for the Riddle Farm system, but the majority was a loan to be repaid over a 10-year period starting next summer.

The commissioners also decided to form a workgroup to brainstorm solutions. Serving on that group were Commissioners Ted Elder (District 4, Western), Eric Fiori (District 3, Sinepuxent) and Jim Bunting (District 6, Bishopville).

“The fact is, money was taken from one profitable district out of the 11 and used to pay problems in other districts. That should not have happened,” Bunting said at the March 18 meeting. “When we go through the budget procedures, we’ll hear from the public about all this, and then we’ll make decisions on what happens with these rates.”

That one profitable district is West Ocean City, which has low overhead and is has been running in the black for years, according to Young.

Fiori called the latest pricing proposal “a base point” to begin addressing years of issues with the county’s water and sewer systems.

“Trying to put out an explanation of how we got to his point would take literally the Encyclopedia Brittanica salesman at your door. It is so many different pieces that got us to this – way before this body was up here and got voted into these positions,” he said at the meeting. “These numbers that were put up, these are simply a solution to the enterprise funds to stop losing.”

When it comes to rate increases, the situation is complicated for county officials because the system is a hodgepodge – not all customers are getting the same services, and they all aren’t billed in the same way.

Some ratepayers are charged a quarterly base fee and a usage fee, while others in a different area see a flat fee for sewer services. Some get a mix of services, like having county sewer but well water, or county water with private sewer service. Even the billable limits of gallons per day varies between districts.

Not only that, but the number of customers in each area can vary. Ocean Pines’ district serves thousands of homes, while the Newark district, for example, has about 100 customers. Smaller service areas may see bigger bills because they don’t have enough of a population to spread the cost around, resulting in some residents paying far more for water and sewer service than their neighbors.

“Instead of raising those rates in the past gradually like they should have been, and running the EDUs for capital improvements, that’s what happened,” said Elder, the commissioners’ president, at the meeting. “That’s how it got caught up on us.

“We’re partially responsible because we didn’t dig down deep enough,” he added, “and I gotta admit that right here. I wish I had looked into it even deeper 10 years ago. But the train was already running down the tracks toward a dead end. By what we’re doing now, we’re trying to put it together in a way that puts less pain on everyone; everybody’s gonna have some.”

Looking ahead, one audacious solution to dealing with a patchwork of independent wastewater treatment plants would be to physically combine all 11 facilities into a centralized forced sewer main.

That way, if one plant should malfunction, county public works employees could reroute wastewater flow to prevent a service interruption. However, this would be an extraordinarily expensive solution that would take years to complete, officials said.

“By consolidating the service areas, the county will be better able to take care of all the plants through increased efficiencies,” said county spokeswoman Kim Moses. “The current situation is not ideal, and we are trying to fix it.”

Also at the meeting, Commissioner Chip Bertino (District 5, Ocean Pines) expressed his dissatisfaction that pricing proposal meant that his constituents would be forced to pay higher user rates, even though their wastewater fund wasn’t among those being mismanaged.

“This government did a lousy job overseeing the financial operations of our service areas, and the people who are being held accountable are the ratepayers, not the people who created this situation to begin with,” he said.

“This issue has so many different variables of, I guess, we’ll just call it gross negligence,” Bertino added. “I understand that certain service areas, if they were held to pay for deficits in their own areas, their rates would go up. Well, their rates would go up. I think it’s wrong that Ocean Pines is being asked to foot the bill for this because we have the most users – and, relatively speaking, operating more efficiently than some others.”

Bertino asked his fellow commissioners to approve sending a detailed notice to all ratepayers, outlining the per-household rate increase, percentage increases over the current year, and where the money would go, dollar for dollar.

When that motion failed in a 3-4 vote, Bertino then scolded his peers, saying, “we’re not asking for anything more than providing information to the ratepayers. This body has decided that – let’s just keep them in the dark.”

“I don’t think we’re trying to keep anybody in the dark here,” shot back Commissioner Joe Mitrecic (District 7, Ocean City). We voted to have a public hearing. I don’t support spending money out of an already underwater enterprise fund to send out a letter.”

The board finally decided to post all the information Bertino requested on the county’s website in the immediate future.