Onondaga County, N.Y., is no different from the rest of the nation in that it is always challenged to balance infrastructure needs with taxpayers' capacity to fund maintenance and improvements. In recent years this challenge has been made more difficult by state and federal mandates to clean up Onondaga Lake.
Located adjacent to Syracuse and at the center of the county, Onondaga Lake was, at one time, one of the nation's most polluted lakes. It suffers from more than 100 years of industrial and municipal sewage pollution, as well as from urban and rural stormwater pollution.
In 1988, the environmentally focused Atlantic States Legal Foundation Inc. sued Onondaga County under the Clean Water Act to improve the county's main wastewater treatment plant and address more than 60 combined sewer overflows known to discharge untreated wastewater into three of the lake's tributaries after rainfall and snowmelt events. In January 1998, a federal court ordered the county to overhaul the treatment plant and collection system by 2012.
The ruling initiated the largest infrastructure project in the county's history. But while transforming the lake into a recreational asset and urban amenity is expected to stimulate economic growth, the tax-supported cost of the improvements —estimated to exceed $500 million—represents a real risk to the area's fragile economy.
Like much of upstate New York, Onondaga County's economy lags behind the nation, due largely to manufacturing declines. Taxes in New York are among the nation's highest. While construction costs of cleaning up the lake are supported in part by grants from the state and federal governments, lake and capital improvement debt plus 2007 operating costs required a staggering $64 million in appropriations—a 28% increase over 2004. Nearly $250 million had to be raised elsewhere.
Like elected officials everywhere, no one wanted to increase taxes or support a $20 annual increase in per-sewer-unit charges. They had to find a way to minimize fee increases from year to year without compromising the project's progress.
To mitigate sharp spikes in user fees, in 2005 county and state policymakers sought to develop a forecasting model that could manipulate project cost estimates, interest rates, bonding structures, reserve levels, departmental fund balances, construction schedules, and maintenance costs that can't be put “on hold” until the project is completed.
Creating A Model
The county needed a predictive tool to integrate:
- Past, present, and future capital costs and associated debt
- Current and projected operating costs and revenues
- Available and projected state and federal aid
- The impact of low-interest loans
- The time during which all these inflows and outflows were expected to materialize
- The inflation rates to be applied to each cost factor.
This management tool had to allow the county to manipulate variables under its control (such as fund balance, reserve for bonded debt, the borrowing schedule, and certain cost items in the annual operating budget and certain non-mandated capital projects) in order to anticipate sudden fee increases and replace them with gradual and predictable increases that could still cover project costs.
The forecasting model manipulates debt service costs, energy costs, and other operating costs. Users can consider both “scheduled debt” generated by funds already borrowed for completed projects, and future debt, authorized or to be authorized, for anticipated projects. (Project costs and borrowing schedules are determined by a group of experts and managers from the Department of Water Environment Protection, the Budget Department, and consulting engineers charged with project design.)