Rates and Prices for Public Services: Application — Governing Board Primer on Setting Water Rates.
Length: 2-3 Pages, single spaced
The subject of your staff report: Local municipal governing boards have to set or update fees for services, but individual board members rarely know the original rationale for the fees their organization uses, nor do they have time to research the subject and understand its many nuances. You are an analyst working for the city manager of the City of Difficult, New York. The manager and board have agreed that they need to examine water rates and probably revise them, so they more fully cover the costs of providing water services. The manager has tasked you with providing a 2–3-page primer/summary on important concepts and useful background materials for board members. The report should provide material to guide them as they consider the task of reviewing and considering revision of water rates.
Local law governing the current fee structure lacks any background on why the current fees were structured the way they were. The city clerk has been assigned the task of researching city records to identify explicit or implied reasons for the current rate structure. He will provide a companion summary for the manager and board to review.
Setting fees shows up in various forms in different public services for both administrative and direct services.
See Michel chapter 7 For local governments, water rates can be complex because of the mix of public goals involved. The structure of rates influences citizen behaviors and has a variety of impacts on fairness and equity across different service users and user groups. Goals include: (1) pricing the service to cover operating costs and long-term capital needs, (2) treating different user groups appropriately, and (3) meeting local or regional water use conservation goals (include relevant/related performance information or tracking). Pricing for users outside the municipality is also a concern.