DEP Environmental Protection Invoices, 1999-2001

NYC 9/11 Public Portal Document

FY2002 Rate Considerations • FY2001 Increase was 1% • Current financing documents indicate a 4% rate increase for FY2002; last year at this time FY2002 was projected at 5.4% • Because of DEP's large mandate driven capital program, future debt service requirements continues to push rates sharply higher in later years • The smaller the increase imposed this year, the larger the required increases in later years • The average annual rate. increase during this Administration has been 3.8%; the average during the prior administration was 12.5% and the average from 1986-1994 was 14.5%

• FY2001 YTD Revenues are on plan; the base forecast assumes that collection efficiency will increase 1%/yr FY02-FY04, and 0.5%/yr in FY05 and 06 • Collection efficiency improvements depend on OMB approval for DEP self funding an approximate $8 million Agency wide PS shortfall with OTPS funds currently in a sludge holding code • Additional new needs amounting to $27 million have been identified; a reasonable expectation is DEP will receive $22 million • The current baseline assumes 2.5%/yr inflation for collective bargaining

• Alternative assumptions: 2.5% or 3% on collective bargaining $22435 million in new needs - 1% collection improvement or no collection improvement

Recommendation • At least a 4% increase should be imposed • A 3% increase would provide less margin of safety and flexibility against potential financial risks related to: a higher CB settlement, possible shortfall in meeting collection efficiency target, unforseen costs (Croton) • A 5% increase would have to be explained as a departure from the published number. It does not significantly improve the out-year rate profile and its primary merit is to provide insurance against financial risks that are possible, but not all of which are probable. • DEP recommends a 4% increase. This is consistent with the current published projection and with the policy of maintaining the lowest rate possible while continuing a stable rate pattern in future years. It also helps keep pace with the 7% increase in cost of service while providing a reasonable draw down on the accumulated surplus

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