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Reader wants to know 'the rest of the story'

Posted: September 14, 2012 4:37 p.m.
Updated: September 17, 2012 5:00 a.m.

Camden’s public relations firm, Columbia-based McKay Public Affairs, issued the following press release which was published in the Chronicle-Independent as part of an article on Friday 9-7-12.

“The city of Camden has maintained their ‘A’ rating and ‘stable’ outlook from Standard & Poor’s Ratings Services. The city has continued to demonstrate good fiscal control during an exceptionally tough economy and is reinvesting its own money into reinforcing utility infrastructure. The city also continues to work to build up the city’s cash reserves.”

The C-I article added that the “S&P’s ‘A’ rating reflects the quality of the city of Camden’s innovative and comprehensive vision plan”

I would first like to commend the city of Camden on receiving an “A” rating from Standard & Poor’s for their combined utility. The city employees and management of the combined utilities along with the city’s finance department have been successful in developing and executing their budgets in a manner that has put Camden in a sound fiscal position. I also see on a daily basis the improvements to Camden’s utility infrastructure which continue to make the city more structurally sound and appealing.

While attending the city council work session on September 11, Mr. Mel Pearson presented the S&P rating results to the council. He was very complimentary to the city employees for their hard work and to the council for accepting the recommendations of the city staff regarding establishing and executing the budget. City council members also took turns complimenting the city employees as well as expressing their satisfaction in moving the city in a positive direction.

To satisfy my curiosity, I obtained a copy of the Standard & Poor's Ratings Services report and reviewed it to determine how their rating is established. The S&P report for Camden’s utilities states that the “A” rating was based on a number of factors, including “a stable, mostly residential customer base” and “a demonstrated willingness to raise rates.” The S&P report also indicates Camden’s business risk profile score is a “4” on a scale of “1-10” and identifies “the ability to set rates as required to meet operating costs” and the “exclusive right to provide a combination of electric, water, and sewer services to customers” as contributing to the “4” rating.

S&P also states that Camden’s electric rates increased 18 percent in fiscal 2009, 4 percent in 2010, and 3 percent in 2012 and they expect a 5 percent increase in fiscal 2013. Camden’s in-city water rates have increased 5 percent to 7 percent in fiscal years 2011-2013, while sewer rates increased 15 percent per year to accommodate the cost of building a new sewer treatment plant. The utility expects 3 percent to 5 percent annual water and sewer rate increases annually in the next five years.

To me the most interesting statement in the S&P report is that “The utility has a track record of satisfactory financial performance despite relatively large cash transfers to Camden’s general fund. It has historically transferred to the (general) fund slightly more than $2 million annually or 8 percent-13 percent of revenues.”

While attending city council meetings in the past, I have heard mention of initiatives that the city has accomplished without raising taxes. Based on an annual $2 million revenue excess in the combined utilities, the city has been able to send millions from those utilities to the “general fund” to pay for initiatives. Utilities have proven to be a significant money generator and a steady source of income to Camden. Tax increases are very visible and generally are met with scrutiny and resistance. However, utility increases tend to fly below the radar and can’t be avoided by any of its customers. Camden’s “exclusive right” to supply critical utilities wields a heavy hand because city residents have no option other than to pay ever-increasing rates.

The S&P Report indicates Camden has “a stable, mostly residential customer base” which means there are not a large number of businesses that help shoulder the burden of the city’s initiatives. Also, “Camden continues to work to build up the city’s cash reserves,” which requires increased revenues flowing into the city coffers.

A “demonstrated willingness to raise (utility) rates” helps the city maintain the $2 million revenue stream used to pursue the initiatives that city council feels right and proper, and while the additional funds may not come from increased taxes, do not think for a minute they happen without more money coming out of your and my pockets.

In thinking back on what I heard at the city council work session, the most deserving group and the group everyone forgot to compliment for helping the city achieving their “A” rating, are the people paying their utility bills each month. We are the real contributors to achieving the “A” rating and we seem to be forgotten in the city council’s desire to compliment themselves on a job well done. To spend more, the city needs more money flowing into their bank accounts and the citizens are opening their wallets each month and providing the funding necessary to improve Camden.

Ultimately, the Standard and Poor’s “A” rating in their report has little to do with the quality of an “innovative and comprehensive vision plan,” rather a confirmation of what we all realize each time our monthly mailing from the city of Camden arrives. All you have to do is look at your August utility bill, it tells the rest of the story.

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