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HTA ALERT - SAWS RATE HIKE THURSDAY

From: William E. G.
Sent on: Tuesday, February 5, 2013 11:30 AM
Dear All:
 
The City Council will consider the San Antonio Water System rate hike this Thursday.
 
We expect Chamber's of Commerce, contractors, and others who may profit from the rate hike to speak in support.
 
The rate hike is agenda item 4. You can sign-up to speak between 8 and 9 am Thursday at Council Chambers.
 
You can fight back!
 
 
Bob Martin
 
 
 
Below are Council Representative Carlton Soules concerns about the rate hike.
 
 
Time for SAWS to get serious on Cost Cutting
 
Dear Friends, Neighbors, and Citizens of San Antonio:
On January 31st, City Council will vote on a proposed 9.9% rate increase
by the San Antonio Water System (SAWS). This follows two major
increases in the last 3 years, and a plan to bring additional rate increases
forward every year at least for the next five years.
Rates will rise in the coming years. The reasons are twofold. First, San
Antonio must secure more non-Edwards water to sustain our future
growth. Second, SAWS has neglected to properly maintain and upgrade
our sewer system for many years. The EPA is finalizing a decree that will
force SAWS to address this issue. It will be expensive.
The question now is how much of an increase will the ratepayer be forced
to endure, and is SAWS doing everything possible to reduce the pain?
During last years council meeting approving a 7.8% increase, I said I
would be supportive of the portion of the rate increase that dealt with
capital projects and securing more water. I would not support the 30% of
the rate increase earmarked to increases in salaries, benefits, and
additional operational expenses. After more than a year of studying
SAWS, it is clear that this organization has not engaged in serious cost
cutting measures to date, nor do they have a plan to do so at this time.
Similar to SAWS, both CPS and the City are experiencing growth in
customers and have similar demands on operating and personnel expenses.
Each year the City requires major departments to present a budget plan
showing a 5% budget decrease. Through this effort, the City has greatly
reduced employee counts, maintained a balanced budget, and kept taxes in
check. At CPS, intense department consolidation efforts and efficiency
programs have reduced employee counts and allowed CPS to avoid a rate
increase three years in a row.
To be clear, consolidation and rightsizing are not pleasant exercises to do.
Pet projects get shelved. Priorities get changed, and departments have to
learn to make do without what they thought were necessities but in reality
were luxuries. That is one of the reasons the leaders of each of these three
organizations are being paid absolute top dollar. We expect them to run a
tight ship and not look to the rate payers for a bailout at the first sign of
trouble.
In two years, the SAWS leadership team has not come up with any
significant plan to reduce overhead. Each and every item is deemed a
critical necessity to be funded at all costs. I suggest there is a great deal of
cost cutting that could be done. In the remainder of this article I will
propose a number of areas where SAWS’ can cut internal costs. These
suggestions are just the low hanging fruit. An exhaustive and meticulous
review of the entire organization’s structure, policies, systems and
priorities would yield many more saving opportunities.
Freeze employee related expenses for two years:
SAWS’ is requesting a budget increase of almost $5 million in higher
salary and benefit expenses for 2013 vs. 2012. This is on top of an
increase of $3.3 million in 2012 and $7 million in 2011. Also, SAWS is
projecting an addition of 49 full time or part time employees for 2013. In
an organization with over 1700 employees, there is certainly room for
savings through attrition and through reassignment or elimination of nonessential
jobs. At the very least SAWS should hold to 2012 numbers but
aspire to roll back to 2011 expenses, thus saving the rate payers almost $9
million annually. For those who are skeptical that this can be done, look
at Bexar Met. In 2009, Bexar Met had 387 employees servicing 92,800
connections and 250,000 people. When SAWS took over they made deep
cuts into Bexar Met’s overhead. Today while operating under the SAWS
administration, Bexar Met now has 166 employees servicing the same
area. SAWS needs to apply the same critical evaluation to its own
organization.
Consolidation of Executive team:
Last year my office surveyed the executive salaries of the other major
Water Utilities in Texas. These were Houston, Dallas, Fort Worth, Austin,
and El Paso as well as San Antonio. Here are the findings: There were 78
employees at an Assistant Director or above title for these six utilities.
Statewide, 24 of the 78 executives made salaries in excess of $150,000.
SAWS had 14 of the 24 executives making above $150,000 or almost 60%
of the total. Further there were only 6 executives in all of these water
utilities making more than $200,000, four of which work for SAWS.
By any imaginable measure, SAWS has the largest and highest paid
executive team in the state. This is an area that needs to be looked at and
potentially addressed by the SAWS board.
Immediate reductions in Advertising, Sponsorships, and Marketing:
While there are some public service announcements that SAWS must
communicate to customers, and some events they must be at, this category
can be scaled back dramatically. Spending on billboard, television, and
radio advertising to promote the image of SAWS is wasteful and
unnecessary. Telling the citizens that we are “waters most resourceful
city” or “a top place to work” might be nice, but not critical. Neither is
sponsoring golf tournaments, lunches or paying for memberships normally
associated with the private sector. Although not huge, these dollars might
be better utilized helping our most destitute ratepayers through
affordability programs rather than patting ourselves on the back.
Reduction in consulting expenses:
For an organization as highly compensated and fully staffed as SAWS,
they seem to rely heavily on outside consultants and experts to accomplish
day to day activities. Some examples: SAWS has over 200 people in the
Engineering and Construction department, yet huge numbers of projects
require outside design and engineering contracts. There are 15 folks in the
legal department, yet SAWS still spends millions each year in outside
legal fees. SAWS Information Technology, Human Resource, Public
Relations, and Conservation departments appear large for an organization
of their size. Especially relative to the City and CPS, and both also have
large contractual service expenditures.
In my experience an organization can follow one of two business models.
Either it has a small core of internal experts who can outsource projects
and functions to other organizations (such as private sector companies), or
it brings most functions in house and greatly reduces dependence on
outside help. My personal preference is the first model, because it
encourages competition along with new and innovative ideas. But I know
one thing for sure, implementing both models is not a recipe for success
nor is it beneficial to the ratepayers who must fund the high costs of
inefficiency.
Move headquarters to downtown:
In 2004 SAWS acquired the Valero Headquarter building on HWY 281
for a price of $27.25 million dollars. It was a great deal for prime
commercial space valued at over $50 million, and the leadership at that
time deserves credit for a bold investment move. However times and
priorities change. We have had four years of economic downturn. The
SAWS board should consider returning this property to the private sector
and reaping the financial gain from the sale on behalf of the ratepayers.
They should also direct SAWS to look at the abundant amount of very
affordable downtown lease space in which to move their operation.
Moving SAWS to affordable downtown space would be a benefit to the
ratepayer and to the Mayor and Council’s downtown revitalization effort.
Also, in these tough new times, it is not really appropriate for a public
utility to occupy space befitting a Fortune 500 Company Headquarters,
especially when that utility is demanding huge rate increases.
To reiterate, the facts are that we have a lot of work to do to fix our sewers
and secure more water for our future. Rates will be going up, and in these
tough times it will tremendously burden our seniors and those living on
the economic edge. Because of this truth, it is our duty to minimize the
burden on taxpayers. SAWS should prove clearly that they have
implemented all available internal cost saving measures before asking
ratepayers to open their pocketbook. My opinion is that SAWS has a long
way to go before they can make that claim. They must demonstrate they
are willing to make deep internal sacrifices before I am willing to ask for
your sacrifice. Please know that as your elected representative, I will
continue to dig into this issue and provide more information to you in the
near future.
Thank You.
Carlton Soules
City Council District 10


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