The New Orleans Sewerage & Water Board may be owed as much as $134 million in unpaid charges racked up by customers over the past three years, close to 20 percent of the total money billed by the water and sewer systems during that time, utility officials acknowledged under questioning by City Council members on Tuesday.
The news of the dramatic disparity between what the embattled utility has billed for water and sewer services since 2016 and the amount it has actually collected from customers comes as both the S&WB and Mayor LaToya Cantrell, who serves as the board's president, have been raising increasingly urgent concerns about its dwindling finances.
To steady the ship, Cantrell has been trying to broker a deal in Baton Rouge that would see the utility — which has warned that its drainage system could be broke before the year is out — get both a one-time infusion of emergency cash and tens of millions of dollars more a year in tax money that would be redirected to it from hospitality and tourism agencies.
The Sewerage & Water Board has failed to collect more than $134 million in charges racked up by customers over the last three years, money…
Those fragile negotiations could be imperiled if state officials do not believe the S&WB is doing all that it can to properly manage its own finances. That concern was explicitly voiced by an angry Cantrell, who called The Advocate late Tuesday afternoon to complain that reporting on the figures “could kill the deal.”
“What do you want to do, screw the city?” Cantrell asked in a phone call hours after the newspaper posted an online story about the questions over unpaid bills. “Is that what you want?”
“Who’s doing the work trying to get the money we need? Me,” she said. “It’s for the city. And it’s just that serious. You can play games if you want, but this is not the one. It’s not it.”
The estimate of how much money may be owed to the S&WB was compiled by Councilman Joe Giarrusso and his staff, working from past agency reports. It amounts to about half of what the utility has budgeted to run all its systems for the coming year.
Under questioning by Giarrusso at a Public Works Committee hearing Tuesday morning, S&WB Executive Director Ghassan Korban said he could not dispute the figures. But Korban added that it would take months to figure out how much was actually owed by customers and how much was the result of billing problems or other errors.
It was unclear how much of that money would turn out to be entirely uncollectable for those and other reasons, he said.
“The numbers that we learned today of $134 million possibly being owed to Sewerage & Water Board are eye-popping,” Giarrusso said after the meeting. “We want them to have the money they need to operate. But they’ve got to collect the money that’s owed to them.”
Cantrell did not dispute the numbers — in fact, she credited her administration with already being aware of them — but said reporting on the figures promoted a “false narrative” that the S&WB could do without money she says it needs for the city's very survival.
All three of the S&WB’s systems have been in rocky financial shape for months, in part due to more than $80 million in emergency spending to shore up the drainage system in the aftermath of flooding in August 2017.
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The three systems — water, sewer and drainage — have seen their reserves depleted, with drainage bottoming out and being forced to rely on loans from the other two branches to keep operating.
All of the uncollected money is for water and sewer service, both of which are funded through customers’ bills. The drainage system, which is financed by property taxes, is not expected to have enough money to make it through the year — even if it does not pay back roughly $26 million it still owes to the other two arms of the utility, Korban said Tuesday.
The prospect of running out of drainage money would not be solved by bringing more money into the water or sewer systems and would not represent a sustainable long-term source of funding, Cantrell said.
The deal she is seeking would include a one-time cash infusion of $75 million and up to $40 million a year in money from entities like the Ernest N. Morial Convention Center, which would be combined with other funds raised by the S&WB.
“We know we’re owed money. I’ve been talking about that ad nauseam,” Cantrell said. “Even if we had the $140 million in hand, man, the problem is not solved. We’re talking drainage, man. We’re talking no reserves, man. We’re talking no cash flow, man.”
A working group including representatives of Cantrell and Gov. John Bel Edwards is currently hashing out the details of the initial lump sum payment, and about a dozen of its members have told The Advocate the group is expected to deliver about $50 million.
Tourism and business leaders have also been meeting about the longer-term funding plan, in response to Cantrell's ongoing campaign to wrest away some of their funding for the critical issue of fixing the city's drainage system and other infrastructure. It's not clear how much money would be offered under the plan they devise.
Council members also raised concerns about how news of the uncollected money might affect the ongoing negotiations. But they focused their attention on ensuring the S&WB is doing all it can to bring in money from the unpaid bills.
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“We keep on saying we need help, we need help, and it’s clear that the Sewerage & Water Board needs as much help as can be provided,” Giarrusso said during the meeting. “But we need to help ourselves too. And it’s not just $2 million or $3 million that’s owed. It's $130 or $140 million that’s owed.”
Uncollected money at the S&WB has been a thorny issue in recent years, given long-standing problems with its billing system.
As overbilling problems reached their peak in 2017, the S&WB decided to suspend its policy of shutting off water to delinquent customers until it could solve the issues with its system. That policy was then blamed for plummeting payments, and shutoffs were resumed last year.
The council came out against shutting off customers at the time, arguing the utility had not done enough to fix its billing problems.
Giarrusso said Thursday that rather than shutting off water to those who owe money, the S&WB should consider using devices that would limit the amount of water that could go to a customer. That would limit the water they get to what is needed for essential needs — such as drinking and cooking — while not providing enough for bathing or more extravagant uses like watering lawns.
Korban said the utility is doing what it can to improve its billing system, which has been racked with problems and issues of widespread overbilling for years. The fixes include hiring an outside firm to look for large-scale users who may not be paying, hiring more meter readers and improving their routes, and taking steps to ensure there are no problems with the meters themselves.
But he said he did not have answers at hand on how much of the unpaid money could be collected quickly, or at all, and how much of it represented valid charges versus billing snafus. He said it might take months to sort those issues out.
Councilwoman Helena Moreno said answers are needed far sooner.
“There could be $140 million on the table right now, and I think we need answers like next week as to whether that number is accurate," Moreno said. "And then when we have an accurate number, do everything possible to collect.”