Effective Management Under Municipal Ownership

Abstract

MUNICIPALLY owned water utility should be operated in such manner as to be of the best possible service to the citizens of the community which it serves. This purpose involves the furnishing of an adequate supply of pure water at proper pressure for both general service and fire protection; the proper design and maintenance of both the pumping equipment and the distribution system, so that continuous service may be given with a minimum of interruptions; and the management of the utility in the most efficient manner, so that the water rates will be reasonable and the finances of the department adequate. In this paper, the author does not propose to discuss the relative merits of municipal ownership and private ownership at any great length. Municipal ownership does, however, offer certain definite advantages, which must be realized, and certain inherent disadvantages, which must be guarded against if the utility is to be of maximum service to its community. Among the advantages of a municipally owned utility are that its obligations, income, real estate and personal property are all tax exempt, that it is not subject to many of the Federal and state regulations which apply to private utilities, and that the rate of interest on its bonds, largely due to tax exemptions, is lower than that on the bonds of private enterprise. Its property tax exemption, however, works to the definite disadvantage of the city, itself, unless the utility pays taxes to the city at the local tax rate. Among the disadvantages of a municipal utility are that its management is not, generally, as continuous as that under private ownership and that, in some cases, its employees are selected on the basis of political preferment rather than on merit. These conditions,