Harford County faced a fiscal crisis. The annual revenues in their operating fund were not adequate to cover even their annual operating costs. Reserve funds built during good economic times were depleting rapidly. Without a funding infusion, the water/sewer fund faced a $7.5 million deficit in fiscal year 2017 that could grow to a $74 million deficit by fiscal year 2021.
A primary cause for the forecasted deficit was the sustained practice of adjusting customer rates based solely on the Consumer Price Index (CPI), rather than a comprehensive financial plan. Other factors, such as declining water usage, aging infrastructure and an expanding service area, further contributed to the county’s fiscal challenges. To address these challenges, Harford County selected Black & Veatch Management Consulting, LLC, to perform a Comprehensive Utility Revenue Study that included a cost of service rate analysis.