Lawrence joins in lawsuit to overturn Trenton water-rate hike

By Lea Kahn, Staff Writer
   Lawrence Township has joined three neighboring municipalities in suing the City of Trenton, seeking to overturn the City Council’s recently adopted ordinance that raises the water rates by 40 percent.
   Lawrence, Ewing Township, Hamilton Township and Hopewell Township filed the lawsuit in Mercer County State Superior Court on Tuesday.
   The seven-count lawsuit seeks to invalidate the ordinance, which was adopted last month and affects nearly 40,000 customers in the four townships that are served by the Trenton Water Works.
   The lawsuit also seeks a restraining order to prevent the city from transferring money from the water utility system to the city’s general fund and to have the Superior Court declare the ordinance is “an unconstitutional violation of the taxing powers” under the state Constitution.
   The lawsuit claims that the city has transferred money from the dedicated funds of the Trenton Water Works to the City of Trenton’s operating budget. The city transferred $1.2 million from the water utility between 2004 and 2006, and $6.2 million in 2007.
   ”As a result, money that has been paid by the customers and ratepayers, including the (four) municipalities, has not been applied for the benefit of the ratepayers but has been diverted by Trenton for its independent and non-water service uses,” the lawsuit said.
   The lawsuit said the city has designated $12.3 million to be transferred to the city’s operating budget from the “surplus to current fund” line item in the Trenton Water Works’ operating budgets for 2008 to 2011.
   ”Amounts charged to the customers and ratepayers, including the (four) municipalities, for ‘surplus to current fund’ are not related to the provision of water treatment and delivery services,” according to the lawsuit. The money is built into the water works budget to create a budget surplus.
   The lawsuit also contends that if the city government were not planning to transfer at least $3 million annually from the water fund to the city’s current fund, a 40-percent rate increase would not be required. The additional revenue is not going to be used to maintain the water system in the four townships, but will be transferred to the city budget, it said.
   A 40-percent rate increase also would not be required if the Trenton Water Works accounted for such elements as customer growth in the four townships or fire service revenues (for the fire hydrants), the lawsuit said.
   The lawsuit also challenges the ordinance because it raised the rates for fire hydrant service in the four townships — but not in the City of Trenton — and thus invalidates the ordinance.
   State law says a municipality that operates a water utility system that provides service inside and outside of its borders may not raise rates without the state Board of Public Utilities permission — unless the inside and outside rates are equalized.
   And the lawsuit alleges that the ordinance violates the New Jersey Constitution, which allows municipalities to set taxes, because the four townships do not have a representative on the Trenton City Council or in city government.
   The city’s transfer of money from the water utility to the city budget represents an “unauthorized and unconstitutional tax” on the four municipalities, which violates the state Constitution, the lawsuit said.
   City officials have said the rate hike is needed to pay for improvements, which range from a $70 million upgrade to the water treatment plant to a $7 million project at the central pump station.
   Although township officials have criticized the city’s transfer of water utility surplus funds to the city’s operating budget, the state Department of Community Affairs has indicated that the city may transfer those funds.