News Feature | March 1, 2018

‘Financial Mismanagement' At Jersey City Water Authority

Sara Jerome

By Sara Jerome

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Trenton isn’t the only city in New Jersey struggling with deep-seated issues. Jersey City is also making headlines for its water management challenges.

In an audit report issued by the state comptroller’s office, the Jersey City agency got a “scathing” review, according to The Jersey Journal.

Financial mismanagement is the centerpiece of the complaints in the report.

“The [water authority] repeatedly raised water and sewer rates despite having multimillion-dollar surpluses; did not perform financial reviews to determine if rate increases were necessary; lost an estimated $575,000 in revenue after failing to collect payments from bulk-water customers; and allowed its former executive director to give himself raises and other benefits without board approval, according to the 36-page report, released [on February 21],” the report said.

The report zeroed in on the years 2006 to 2015.

It found that “sewer rates increased by 93.8 percent and water rates increased by 38.9 percent. During this same time period, [the water authority’s] year end net position also grew from $10.1 million in 2006 to $86.4 million in 2015, a nearly 760 percent increase,” according to the state report.

State Comptroller Philip James Degnan highlighted the way the authority’s actions affected customers.

“Customers paid more for their water and sewer services each year, when Jersey City Municipal Utility Authority’s (JCMUA) Board and management failed to ensure sufficient justification or need for any of these rate increases,” he said in a statement.

“The residents of Jersey City have no choice in the selection of what entity delivers water to their homes. As a result, JCMUA and its vendor have a heightened responsibility to safeguard residents’ funds and justify any necessary rate adjustments with a thorough and transparent process. We’ve recommended corrective actions designed to address this and other deficiencies found at JCMUA by [state] auditors,” he continued.

The report listed various ways JCMUA can improve its operations, including the following tip: “1. Establish and implement policies and procedures that require the annual budget process to include detailed analysis of financial condition and user rates to determine whether the rates are appropriate and if adjustments are necessary.”

Image credit: "water faucet," karen nador © 2002, used under an Attribution 2.0 Generic license: