New Yorkers are known for their complaints about various taxes, from property to income. Now, residents across the city, whether in co-ops, condos, rentals, or single-family homes, may soon have a new grievance: a hidden tax on water and sewer service that could drive their bills up by over 8% this summer.
Mayor Eric Adams has proposed a plan to revive a funding mechanism that involves charging the city's own Water Board over $1.4 billion in rent over four years to lease its water and sewer systems. This move, revealed in budget documents reviewed by Rahul Jain, a New York State deputy comptroller, could lead the city’s Department of Environmental Protection to suggest an 8.5% rate hike for homeowners and landlords by July, as outlined in a proposal by the board.
If approved, this increase, double last year’s hike and the highest in 14 years, would only cover a portion of the rent charges. Additional funding may be sourced from funds typically allocated for vital upgrades to the water and sewer system, potentially leaving the city vulnerable to breakdowns, especially as an unusually severe hurricane season looms.
Although this funding tactic had been used by New York City for decades, it was shelved in 2017, resurfacing briefly during the COVID pandemic before disappearing again. Former Mayor Bill de Blasio justified its removal by stating the city was 'righting a wrong,' leaving many to question Mayor Adams' decision to reintroduce it.
City Councilman James Gennaro, who chairs the Committee on Environmental Protection, criticizes the funding mechanism as a 'hidden tax,' exploiting New Yorkers without resorting to property or sales tax increases.
Experts point out that water payments constitute a regressive tax, burdening homeowners irrespective of income, while renters bear the brunt through increased rent.
Eric Goldstein, senior attorney and New York City environment director at the Natural Resources Defense Council, describes the situation as 'robbing Peter to pay Paul,' emphasizing the city's pressing water and sewer needs amidst their continual expansion.