Ooh, ooh that SMELL: Jeff Gahan proposes arbitrary CPI pegs to raise sewer rates annually, when sewer rates already are illegally subsidized.


Jeff Gahan, who draws a salary as both mayor of New Albany and head of its sewer board, proposes that in the future, annual sewer rate increases are to be pegged to one or another variants of the Consumer Price Index (CPI) in a formula yet to be identified.

This vague mechanism appeared from nowhere, as appended to a sewer bonding ordinance, and was approved 7-2 in its first two readings, with a final vote coming next Thursday (December 15). As in previous years, city officials are stampeding the vote at year’s end, citing tremendous urgency in solving problems no one knew existed until December.

Returning to the concept of pegging sewer rate increases to CPI-something, there is an obvious question that must be answered first: Is the current sewer rate legal?

Many of us believe it isn’t. Randy Smith wrote the following in the spring of 2015, and it remains a must read for anyone seeking to understand the year-to-year mishandling of New Albany’s sewer utility — and did I mention that the mayor appointed himself to “run” the sewer utility?

(Bold text added)

Sewer Utility Still Draining Tax Dollars

 … I had thought the (illegal sewer rate subsidy) chicanery had finally ended when I read last year that the subsidy had been removed. But just to make sure, I perused the city’s 2015 budget. There, to my astonishment, was yet another transfer of $570,000 from the income tax fund (EDIT) to the sewer utility.

I have written at length in the past about the illegality of this transfer. To be brief, while a city in Indiana can own and operate a municipal utility, the finances of that utility must be completely separated from other city funds. That is, the utility must stand on its own, without subsidies of any kind.

With this budget year, Jeff Gahan has in 11 budget years (as a councilman and as mayor) approved more than $10 million in transfers from city taxes to prop up the utility.

One might be of the opinion that using tax dollars to fortify the sewers is a good thing, but none of us are entitled to an opinion on this matter. State law is extremely clear. It’s illegal. (It happens to be illegal in Louisville, too, under a different state’s laws – ref: MSD.)

This misfeasance on the part of the mayor and council subjects the utility itself to the jeopardy of a taxpayer lawsuit to recover these millions of dollars.

However, illegality has become normal in New Albany. It’s not just the law-breaking that New Albany voters need to be aware of as they go to the polls. This transfer is possibly the single dumbest way to divert tax money and demonstrates innumeracy and financial incompetence on the part of the mayor and his advisors.

Also from Randy Smith, this week:

SEWER RATE INCREASE imminent in New Albany. But instead of taking responsibility for setting a legal rate, the city council has voted to begin an automatic rate increase pegged to some version of the Consumer Price Index (CPI). Final vote is on Thursday, December 15. That is not the legal way to set rates. CPI is not an economic variable – it’s merely a statistic.

My information is that the wastewater utility needs a rate increase of $0.21 per billing unit, meaning even the lightest user would see a rate increase of about 2.8%. But no CPI will provide those funds, leading back to illegal tax subsidies for the heaviest users of the city-owned utility.

Contact your council representatives before it’s too late.

At-Large – David Aebersold (R), Voted FOR
(812) 944-9823, daebersold@cityofnewalbany.com

At-Large – David C. Barksdale (R), Voted FOR
(812) 945-1839, dbarksdale@cityofnewalbany.com

At-Large – Al Knable, MD (R), Voted AGAINST
(502) 386-5051, aknable@cityofnewalbany.com

1st District – Dan Coffey (I-D), Voted FOR
(502) 797-8347, dcoffey@cityofnewalbany.com

2nd District – Robert Caesar (D), Voted FOR
(812) 945-8744, rcaesar@cityofnewalbany.com

3rd District – Greg Phipps (D), Voted FOR
(812) 949-8317, gphipps@cityofnewalbany.com

4th District – Patrick McLaughlin (D),Voted FOR
(812) 949-9140, pmclaughlin@cityofnewalbany.com

5th District – Matt Nash (D), Voted FOR
(502) 718-4986, mnash@cityofnewalbany.com

6th District – Scott Blair (I), Voted AGAINST
(812) 697-0128, sblair@cityofnewalbany.com

Sudden stealth sewer rate hikes reveal the breathtaking extent of Jeff Gahan’s intellectual dishonesty. Isn’t it time to hold Team Gahan and its toadies accountable?

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