Two weeks ago, top officials pledged to crack down on businesses and institutions that don’t pay their water bills before going on to approve a sharp hike in residential rates that started on February 1.

“There has been a big effort around collection, especially from folks that never pay a water bill,” Mayor Brandon Scott said in defense of the rate increase.

Yesterday it was revealed that, until recently, one of the biggest scofflaws was Baltimore City itself.

Agencies like General Services (which manages City Hall and other municipal buildings) and Public Works (which operates the water system) ran up a total of $12.2 million in unpaid charges before the matter was identified and corrected, according to testimony by Budget Director Laura Larsen.

The key problem was that water usage recorded by the city’s high-tech UMAX computer was never reconciled by support staff. So the costs were not booked as expenses and charged by the finance department to the responsible agency, Larsen explained to City Council’s Budget and Appropriations Committee.

As a result, some departments recorded false surpluses, which led to Larsen announcing last October that the city had a $54 million budget windfall.

Following various adjustments, the revenue surplus dropped to $46 million, Larsen said yesterday. Much of the fund balance ($33 million) will go to cover unbudgeted overtime costs at the Fire Department and EMS last year.

Larsen said her office began seeing unexpected surpluses in agencies in fiscal 2023, not knowing that “they were showing large surpluses because they weren’t paying their water bills.”

It took DPW staff about two years to realize that “the billing system that they use, called UMAX, wasn’t reconciled in order to actually initiate the bills for all those city accounts,” she said.

“DPW, as part of the close-out action for fiscal 2024, was able to complete that reconciliation effort and brought these charges to the accounting team at BAPS [the city’s billing office] and indicated that they needed to be booked.”

To avoid such problems in the future, DPW plans to reconcile agency water accounts on a quarterly basis, she said.

Committee members and Council President Zeke Cohen did not question Larsen further about the administrative glitches.

Prior Delinquent Accounts

Larsen’s disclosure of poor management practices and lack of coordination was similar to a 2023 finding by Baltimore Inspector General Isabel Mercedes Cumming.

Cumming reported that the Housing Authority of Baltimore City (HABC) owed nearly $8 million in unpaid water bills at public housing projects.

The federal agency had an outstanding balance that fluctuated between $6 million and $16 million over the previous three years. Cumming found that the city had cancelled $2.57 million in bills recorded by the UMAX system that the housing authority had disputed.

Similar to the scenario described today by Larsen, the IG said that water consumption calculated by UMAX was not properly transmitted to BAPS for billing. Additionally, older water accounts were sometimes not entered into the new system, which relied on “smart” meters that measure and transmit water usage wirelessly rather than depend on human meter readers.

Consultant Costs

The latest glitch underscores the longstanding problem of installing a state-of-the-art billing system at an agency with undertrained staff and dependent on high-priced consultants.

Since 2014, DPW has contracted with the Belgian software conglomerate Itineris to oversee the UMAX customer information system.

The contract with Itineris was modest at first – $8 million to supply technical support from consultants that flew in from Atlanta.

The consultants never left, and by 2022, the Board of Estimates had approved five supplemental appropriations that totaled $41 million. According to DPW, the in-house staff still needed training.

On January 8, the Board of Estimates upped the contract to $53.6 million, saying the consultants would be needed through October 30, 2026 to “ensure continuity of service” and “provide funding for the balance period of the contract.”

The $12 million add-on translates to over $500,000 a month for the next 22 months, according to BOE records.

• Wonder why your water bills keep going up? Take a look at outsourcing at DPW (1/8/25)