MWRA drafts new fiscal 1995 budget plan to avoid overall rate increases.

BOSTON -- The Massachusetts Water Resources Authority announced late last week a proposed new budget plan that would cause no overall rate increses in fiscal 1995 for the 60 communities for which the authority provides water and sewer services.

If the board of directors approves the plan, fiscal 1995 will be the first year without a rate increase since the authority was established in 1985, according to Paul S. DiNatale, an authority spokesman.

Earlier this year, the authority's board of director approved a plan that would have raised rates by 5.4% on the heels of a 4.8% increase in fiscal 1994.

The authority's advisory board, which is made up of representatives of the communities served by the authority, removed the increase in revising the plan. The MWRA customarily has the advisory board prepare the final version of the fiscal plan.

"This is the steady-as-she-goes plan," said Douglas B. MacDonald, executive director of the authority. "Our advisory board has a pretty good idea about what our needs are and have made recommendations that they think are appropriate."

To achieve the plan, the authority's budget committee shaved over $14 million from the proposed fiscal 1995 budget. The original budget, filed in February, would have called for $398.4 million. The new budget asks for $383.6 million.

Of the total budget, the preliminary plan called for rate revenues of $320.8 million. The revised budget calls for only $304.4 million.

During fiscal 1994, the authority said that over 50% of the budget was allocated for debt. But the new plan factors in the $27 million the authority will receive from the state in rate relief.

MacDonald said yesterday that the budget revisions were caused by reducing funding for several of the authority's costliest projects.

The largest single cut involves the nearly completed Deer Island Sewage Treatment plant, which MacDonald said will probably open this fall. Earlier predictions were for a summer start.

"There will be some costs associated with opening the facility," MacDonald said. "But because the plant will be opening but later, we will require less money from our communities to run it during this fiscal year."

MacDonald also said the authority cut $2 million from the amount budgeted for salaries and wages during the fiscal year.

He said that under the plan advocated by the advisory board, the authority has reevaluated certain vacated positions for next year.

Most of the hiring over the next fiscal year will be for Deer Island, MacDonald said. The advisory board suggested that the authority be "extremely cautious and conservative" in its staffing of the 500-person facility.

The authority has also added $2 million to its estimates of how some of its investments will perform for the year based on current interest rates, MacDonald said.

For the upcoming fiscal year, MacDonald said the authority was planning a $200 million bond safe in late summer or early fall and another sale of about the same size next spring. But market conditions will play a large part in the final size of those financings, he said.

Additionally, MacDonald said that authority finance officials are looking into using commercial paper.

"It will be increasingly important for us to decide whether the risks of the short-term market are something worthwhile." he said.

All of the $3 billion of debt that the authority sold in the last four years has been in the form of revenue bonds.

Despite the proposed budget, some communities may still have higher rates during the next few years because of a new assessment method.

Now rates are based only on the population of a communiity, but beginning in fiscal 1995 the community's sewage flow will also be taken into account. The MWRA said this will mean lower rates for most communities.

However, cities with a lot of commuters in their daytime populations will probably have to pay more. This includes Boston and many other of the largest cities in the state.

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