Thursday, November 13, 2008

CoH Jumps Feet First Into the Bailout Pool

The City of Houston is looking to forgive somewhere between 60 and 100 million in bad debt. Why? Because Jolanda Jones' mom got a big past due bill and she didn't want to pay it. Here's the deal. When you skip out on a water or sewer bill, the bill never goes away. If you come back two years later and apply for service again, you will get a bill for the past due amount. Now they do not charge interest (which I think they should.) but they NEVER EVER forgive the debt. This is not unusual, I am not aware of a single municipality that does. Apparently a couple weeks ago during the council "pop-off" session, Ms. Jones had both her mother and a constituent that had outstanding bills come before council to whine about getting such a large bill. Boo Freaking Hoo. Pay your damned bills jackass! Now why Ms. Jones didn't just pay her mom's bill and be done with it I don't know. It's been ten years after all, and it's not as if she is broke or anything. So instead of making these deadbeats pay up, (bleed the taxpayer) White has decreed that PW&E must forgive all debts older than 2 years on a sliding scale. In order to do that however a new city ordinance must be crafted in order to do so. White is apparently very hot to trot to give away money, he has sent a memo to PW&E insisting that they get cracking on writing that ordinance, like, RIGHT FREAKING NOW.

Now it's not as if the city, or PW&E in particular, is swimming in cash. They are, in fact, flat broke. PW&E is supposed to be self-sufficient, but the city has been using water and sewer income in order to make the financial status of the city look better than it really is so that they can float short term paper to finance day to day operations, and have forced PW&E to cut back on infrastructure maintenance and repair in order to keep more of the reciepts in the bank making the city look flush with cash (which if that truly were the case, they wouldn't need to borrow the money now would they?). What with the economy being what it is, the city has to show even more collateral sitting in the bank to get the short term loans. They have also forced PW&E to cut back on hiring people to read the meters, and maintain the wireless meters that have been a major reliability problem (the city has finally clawed it's way ahead of the replacement curve, but if they are forced to cut back they'll fall way behind the curve very quickly.) and to start and terminate service. Without those people, they will be unable to maintain even their current level of profitability. Now to be fair White HAS allowed PW&E to hire a FEW people, but they are still suffering from long term neglect that started under Lanier and really blossomed under Brown.

Now not all of that money is recoverable, but with the manpower problems that PW&E has, they only have the ability to disconnect about 25% of the people who have not paid their bills. So the city's ability to make long term deadbeats cough up the cash is partially offsetting their lack of ability to make the current deadbeats cough it up. As it stands, on average the City accumulates between 1 and 3 mil worth of bad debt a year, which considering that PW&E has about $650 mil of income a year, that ain't bad. But storm clouds are on the economic horizon and Ike has already caused a spike in delinquent accounts from apartment complexes. PW&E can't disconnect those apartments without having council members crawling up their ass and raising hell. So as a result the apartment complexes skate. PW&E has no leverage to make them pay and they know it. If the city starts forgiving this bad debt, NOBODY will have any incentive to pay any of the debt. If they wait long enough it will just go away. PW&E is barely keeping it's head above water now, an economic downturn will have them circling the drain.


Blogger Jason said...

So this mean Ms. Jones' mother wouldn't have to pay the bill?

November 15, 2008 11:43 AM  
Blogger Rorschach said...

Word is that she DID pay the bill, but she whined about having to.

November 15, 2008 6:32 PM  

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