This week, Louisville Metro Councilman Scott Reed and Kentucky state Rep. Jared Bauman welcomed a state review of the Metropolitan Sewer District’s finances.
At a news conference Thursday, Reed said he asked State Auditor Allison Ball to audit Louisville MSD. He and Bauman cited various concerns, including repeated rate increases for customers and the district’s cost management of expensive infrastructure improvement projects.
“I've requested this audit because I believe that we need a new set of eyes looking at the agency,” said Reed, a Republican who represents Metro Council’s District 16. “I mean, the truth is, we need this audit in full transparency to the tax-paying public.”
Louisville’s sewer district is responsible for three major utility services: Wastewater treatment, stormwater management and flood protection.
Reed said the state auditor’s eventual findings could inform Metro Council discussions over whether to reconsider a rule that lets the sewer district raise rates by up to 6.9% without seeking the council’s approval.
“More than anything, I want myself and the public at large to have confidence that this agency is operating in a manner that best serves this community,” Reed said.
The state auditor’s spokesperson, Joy Pidgorodetska Markland, said their office “has seen and heard concerns from local elected officials about Louisville’s sewer district."
“As with any situation brought forward, our office has begun looking into these concerns,” she said.
In a statement, sewer officials said they “look forward to continued conversations with elected officials, including the State Auditor’s Office, to further our continual optimization of services.”
“At MSD, we pride ourselves on being transparent, accountable, fiscally responsible, and an anchor institution for health and safety of the region,” district officials said in the emailed statement.
Louisville’s sewer district carries a lot of debt, with budget documents showing an outstanding $2.7 billion estimated for the end of its 2024 fiscal year.
Sewer district officials said the agency has “sound financial practices” and uses various strategies to maximize its resources and keep rate increases “as low as possible.”
Regarding the rates it charges for services, sewer officials said they’re necessary to pay for billions of dollars of federally required improvements to stop polluted sewage from overflowing into local waterways during heavy rains.
That problem is at the heart of a 2005 consent decree with the U.S. Environmental Protection Agency, which required the sewer district to upgrade its infrastructure.
"That important work is mandated by the U.S. EPA and represents nearly 90% of our capital budget needs,” MSD officials said in Thursday’s statement.
Two years ago, MSD got a significant extension on the timeframe to complete the work, pushing the due date to 2035.
MSD said Thursday that a citizen-led board approves rate hikes of under 7%, and the district provides details to Metro Council whenever it raises rates by more than 4%.
Bauman and Reed said the state audit isn’t supposed to be punitive toward Louisville’s sewer district and its leaders.
Instead, they said this is meant to give concerned citizens access to more information about MSD’s operations and to inform policymakers’ efforts to lessen the financial burden on residents.
Bauman, a Republican who represents Kentucky House District 28, said providing financial relief for citizens is a top priority.
“MSD is a debt-ridden runaway train that is driven by failed policies, questionable decision-making and a lack of accountability to customers and taxpayers,” he said. “It's constant, punishing rate hikes are hurting all Louisvillians, but especially those on fixed incomes.”
