Economic Collapse Watch: Paying 20% Of Monthly Income On The Water Bill In Crumbling Baltimore

Baltimore is falling apart at an even faster pace, and now the basics such as water are quickly becoming unaffordable…

from Zero Hedge

With its surging violence and failing public schools, being a Baltimore resident these days doesn’t seem to be that enticing a proposition.  Unfortunately, crumbling water infrastructure is only adding to the agony of residents that occupy what increasingly looks like a failed city.  As The Baltimore Sun notes today, a new study conducted by economist Roger Colton found that a series of water bill hikes, an effort designed to raise money to repair the city’s crumbling water infrastructure, has left the poorest residents facing bills equal to 20% of their monthly income.

In 8 percent of the city’s census tracts, the poorest fifth of households face water bills costing more than 20 percent of their income, Colton estimated. In a quarter of the tracts, the poorest fifth face bills amounting to between 10 and 20 percent of their income.

By 2019, Colton concluded, water won’t be affordable for households making 150 percent of the federal poverty rate, which is $36,450 for a family of four. A third of city households make that much or less.

Colton defined affordability as a household paying less than 2 percent of it’s income for water. The federal Environmental Protection Agency uses a threshold of 4.5 percent.

“People just genuinely can’t afford to pay ever-increasing water rates,” she said.

Not surprisingly, few Baltimore households have actually budgeted 20% of their annual income for water expenditures which has resulted in many simply skipping payments and others even losing their homes…events which have prompted local city council officials to consider sweeping reforms on how water is priced.

As more and more people can’t afford to pay, the city could find itself in a “downward spiral,” forced to impose larger and larger price increases to pay for court-ordered infrastructure upgrades, economist Roger Colton said.

“Even though Baltimore is raising its water and sewer rates, it’s also seeing this incredibly high increase in the amount of money that it’s not collecting from its billing,” Colton said.

Advocates for poor Baltimore residents, who commissioned the study, say the findings boost the case for the City Council to take up a sweeping water affordability package. The proposal would cap bills for low-income households at an affordable proportion of their income.

The idea is to protect the poor from losing their homes, which can be at risk if they fall behind on their bills and end up in the city’s tax sale system. It also could bring the city more revenue by issuing bills customers can afford.

As the Sun notes, the water department is in a difficult spot after years of borrowing money to pay for pipe and sewer upgrades…loans which now must be amortized via revenue from water customers.  “The city of Baltimore does not have the discretion not to make these investments,” Colton wrote in a 109-page report released last week. “However, and it is a huge ‘however,’ the need to make the investments does not make the ability-to-pay of Baltimore customers any greater.”

All of which is just another fantastic reason for Baltimore residents to promptly relocate to Texas.