City of Milwaukee Comptroller Wally Morics has recommended the City of Milwaukee study whether to lease the Water Works to a private operator, in light of the city’s grim fiscal situation. According to Morics, privatizing the Milwaukee Water Works could bring the city $550 million to $600 million in income from a long-term lease to a private operator, with the money being set aside as an endowment that could generate some $30 million a year to keep city operations running. The Milwaukee Common Council has not ruled out considering privatizing the Water Works, with Common Council President Willie Hines labeling calls for the Common Council to kill the plan outright, “irresponsible” considering the City of Milwaukee’s fiscal difficulties.
Other cities have privatized their water utilities with mixed results. Atlanta privatized its water utility in 1999, but ended its 20-year contract with United Water Services in 2003, citing service problems. According to a letter from the Atlanta Department of Transportation, United Water failed to repair a recurring leak that had been a problem for at least two years, resulting in brown water and poor service. In addition to service problems, cities that have privatized their water supplies have been plagued by rate increases. After privatization, water rates in Hingham and Hull, Massachusetts more than doubled over a five-year period. After American Water Works took over the water operation for 40,000 customers in Huber Heights and parts of the Mad River Township in Ohio, the company increased its rates by 30 percent. And perhaps my favorite rate-hike horror story has to be the story of Pekin, Illinois (emphasis mine):
In 1982, Illinois-American, another subsidiary of American Water Works, acquired Pekin’s water system from a local private owner. In the 18 years that followed, rates increased by 204 percent.
According to Alderman Bob Bauman, chairman of the Common Council’s Public Works Committee, Milwaukee currently charges about half the maximum rates that would be allowed by the state Public Service Commission. Based on past precedent, a private water operator would surely raise rates as much as legally allowed, and the city, its residents, and likely their children and grandchildren, would have absolutely no say in the matter.
Opposition to the privatization plan, led by Keep Public Our Waters (KPOW), are organizing a rally in opposition to the Common Council’s refusal to take the issue of privatizing the Milwaukee Water Works “off the table” completely:
The Common Council is meeting next Monday, June 15th at 12:30 p.m.
We are organizing to fill the room with over 100 people that are in opposition to the idea of letting a private company take over our public water works. The ramifications of this include the likely decline in the quality of our water as well as raised water rates for everyone in the city and surrounding suburbs.
Also, our city is considering a 99 year lease which would put us in a long-term binding agreement with a multinational corporation with marginal ability to hold them accountable. It is imperative that we show up with a large group of people on Monday, June 15th at 12:30 p.m.
If you have a friend with a day off of work or an hour lunch break, please find a way to come and bring a friend. This is about getting citizens to show up and show the common council that we are watching and assessing their performance and that the citizens of this city do not want our water leased to a multinational corporation.
Thank you.
Lastly, we also have an online petition against the effort to privatize the water here in Milwaukee:
http://www.thepetitionsite.com/3/Stop-Water-Privatization-Wisconsin
This is the worst possible approach to solving their problems. Where do they think the lease money is coming from? Of course it comes from rate hikes.
There are some things that only governments can do. And providing water is one of them.
You and I are in total agreement, RC.
Thanks for getting this out there, Zach. Just wanted to point out an update to the timeline. About a month ago we were in the midst of a massive call/e-mail campaign to the aldermen/woman, and as a result of that the CC decided to indefinitely put the privatization process on hold. The process being that at that time the comptroller was actively accepting bids from companies to serve as an advior on how to proceed. The fefar at that point, drawing from the history of how the privatization process of MMSD worked, was that once that advisory contract was accepted it would have essentially been a done deal, despite the fact that it still would have faced approval from the CC. So a temporary victory has already been had, but the pressure needs to be kept up so it doesnt come back up again.
My personal bottom line: I don’t want some unaccountable corporate actuary in an office in some other country making decisions about the quality (and safety) of my water – and basing that decision on the shareholders’ bottom line rather than the public good.
Join the fight: KPOW-subscribe@yahoogroups.com
JCG, the issues of water quality and cost are ultimately why I’m not a fan of privatization in this case. Granted, I’m not a fan of privatization of government services in most cases, but the City of Milwaukee’s water utility shouldn’t be a for-profit venture managed by corporate bigwigs from a foreign country.
Agreed. I do fear, though, that opponents of the privatization (such as myself) may need to be willing to compromise a little on the “cost” issue. The comptroller and aldermen basically flat out said they were looking to privatize as a loopholey (grammar fail?) way to use water money for the general fund (which is very dificult for the city to do directly because of state law), knowing that what that would mean is the private company raising rates substantially then serving as a money launderer for the city, which would essentially be making money off of those profits. If the city is going to permanently take privatization off the table it’s only going to be if they can find a way to increase general fund revenue from it themselves. Just saying that’s their thinking. Personally, I’d hope they can get a little more creative (
http://tinyurl.com/m5e5vv warning: Powerpoint file) and find a way to solve the budget problem while completely leaving water alone.
PS – just as a side note on city of MKE budget problems: with studies saying 80% of city budget is “personnel related”, and aldermen constantly referencing “the growing pension problem”, I keep getting this sneaking suspicion that there’s an underlying pension scandal similar to the county’s that just hasn’t been uncovered by anyone. Maybe paranoia there, though.
PPS – dude, I’m like, wayyyy over my alotted quota time for commenting on BB tonight. Time to go to bed or something!
@JCG The City of Milwaukee’s pension has been one of the best run systems in the country. The market is what hurt the fund this year, but it still one of the best.
Further, I’m not supporter of the water privatization concept, but understand neither is the comptroller or the common council they are trying to plug a big budget hole.
Dave, there’s no denying Milwaukee has a budget hole to fill, as do most municipalities. However, taking a short-sighted approach to “solving” the problem is only bound to create more problems in the long term.
So the Online Petition is down, is it because its over? Or other reasons?
Brandon, I’m not sure what’s going on with the online petition.
This is scary news, exactly as noted, short-term profits may seem tempting but the long-term effects are devestating. The next wars are going to be over water, the last people that we want controlling our supplies are corporations!
http://www.stopcorporateabuse.org/water-campaign
THINK OUTSIDE THE BOTTLE!!!!!!!