2016 Ballot Initiatives – Propositions Y & S Approved
The Metropolitan St. Louis Sewer District (MSD) is two utilities within one organizational structure – a wastewater utility and a stormwater utility. Funding and activities that are a part of the two functions must be accounted for separately.
On April 5, 2016, MSD presented two initiatives to voters that reside within MSD’s service area.
Proposition Y: Wastewater Bond Authorization
Per an agreement with the Environmental Protection Agency and the Missouri Coalition for the Environment, MSD must implement $1.5 billion in wastewater projects from July 1, 2016, through June 30, 2020. Similar to what MSD has done in the past (2004, 2008, and 2012), an option for financing wastewater projects was presented to voters on April 5, 2016, versus paying for the projects strictly through increased rates.
Seventy six percent of voters in MSD’s service area approved Proposition Y and the issuance of $900 million in bonds. The bond financing – which is to be used exclusively for projects associated with the agreement – will help lessen the steepness of rate increases over the next few years. For example, with the approval of Proposition Y, the average single family home’s monthly MSD bill will eventually increase from $40.72 per month on July 1, 2015, to $60.44 per month on July 1, 2019. Without Proposition Y, that same bill would have increased to $95.13 per month on July 1, 2019.
Proposition S: Stormwater Funding & Service Equalization
Through the same April 5, 2016, election, 62% of voters in MSD’s service area also approved Proposition S. The approval of Proposition S puts all MSD customers under the same property tax rates to pay for stormwater service. In turn, all MSD customers will receive the same level of stormwater service. This process will occur gradually throughout MSD’s fiscal year 2017 (July 1, 2016, through June 30, 2017).
Prior to July 1, 2016, MSD’s stormwater services were paid for through a variety of property taxes and a flat stormwater fee on each month's MSD bill. The amount of property taxes paid by an individual customer – and the stormwater service received – was dependent on where a customer lived. Thus, not all customers paid the same rates and, not all customers received the same level of stormwater service.
Proposition S allows MSD to rollback and eliminate several existing taxes; eliminate the stormwater fee; and, in lieu of these funding mechanisms, institute or leave in place two taxing districts that cover MSD’s entire service area.
The overriding benefit of Proposition S is that customers will be treated equally under the new system. This means that all customers are subject to the same tax rates and all customers receive the same level of stormwater services. One tax structure for everyone means some customers will receive a reduction in what they pay annually to MSD; some customers will essentially pay the same annually to MSD; and other customers saw will see an increase in what they pay to MSD.
With the approval of Proposition S and the implementation of a new funding structure for stormwater services, MSD will have “fund balances” left over from the former taxing and fee system. These fund balances will allow for a finite and limited four-year stormwater capital program of $67 million, starting in fiscal year 2017 (July 1, 2016, through June 30, 2017).
However, this limited and set amount of money barely begins to address the overall need for stormwater projects throughout MSD’s service area. The development of a funding solution for longer term stormwater projects will begin in 2016. Any proposed solution is subject to future review by the Rate Commission, approval by the Board of Trustees, and a vote of MSD customers.