Evening star., 1953-07-23
SanitaryAgency
Appears Sure
Rates Will Stick
Commission Hears
Citizen Protests,
Defends Charges
By Gene Goodwin

BY Gene Goodwin
officials of the Washington
Suburban Sanitary Commission
appeared confident today that
the Maryland Public Service
Commission would uphold the
heavy new charges it decided to
levy on its $4,000 suburban
Maryland customers in April.
The public service commission
has not yet announced its deci-
sion on challenge of the rate
increases made by the Allied
Civic Group of Silver Spring and
some other groups and individu-
ais. but indications were that
the decision would favor the
sanitary agency.
The sanitary commission de-
tended it's new sewage charge
and increased refuse collection
and incinerator rates during a
six-hour shirtsleeve hearing be-
fore the PSC in the Silver Spring
Armory yesterday. About 100
persons attended.
Spokesman for the Allied
Civic Group and other op-
ponents based their attack on
new accounting methods adopt
ed by the commission last year.
Pressure on Operative Funds.
Under the streamlining, the
commission began-for the first
time, it Says-to pay virtually
all administrative and engineer
ing overhead out of current
operating funds, thus necessitat-
ing higher charges to it's GUS
toners. Previously, the COM
mission had tapped construc-
ton funds-money borrowed on
long-term bond issues-to pay
most of its overhead.
The opponents said this re-
distribution of overhead ex-
penses was done arbitrarily and
without determining how much
of it is directly related to con-
struction and therefore should
be paid for from construction
funds.
Townsend Wainwright and
Francis Kelly, sanitary commits
sion witnesses, said paying over
head expenses from current
operating revenues is in line
with generally acceptable ac-
counting methods. Mr.. VAIN
wright is financial consultant to
the commission. Mr.. Kelly is it's
auditor. xa..t ~
Old System Held Illegal.
Arthur c.. Keefer, general
counsel to the utility, said the
laws under which the commits
sion operates do not allow over
head expenses to be paid from
borrowed bond money. The pre-
vious Democratic commission,
which ruled the sanitary agency
until 1851 when the Republicans
took over, acted illegally when
it followed that practice, Mr..
Keefer charged.
1t was Mr.. Kelly and his firm
-Boyce, Hughes and Farrell of
New York City - who recon-
mended the new accounting
procedures and the increased
charges. Following the firms
recommendations. the commits
sion last April added a 14-cent
sewage charge to the present
water rate of 81 cents per 1000
gallons and increased the Mont
gomery County refuse collection
rate from 81 .65 to 1925 a month
and the incinerator charge from |
81 to 81 a ton.
Attorney Ralph Miller, repre-
senting the Allied Civic Group,
charged that the sanitary COM
missioners did not know what
they were doing when they
adopted the new rates.
"They followed the recon-
mendation of one accountant,
and thousands of people suf-
fer" he declared.
Asked why the water rate
couldn't have been reduced with
the new sewage charge, Mr..
Wainwright said the water rate
should remain at 81 cents to
"give the water account a chance
to build up a little working
capital" Even with the sewage
charge. sewer operations will still
be in the red until 1857, he added.
will Save Money.
Mr.. Kelly said paying over
head expenses out of water and
sewer revenues as the commits
sion is now doing will save
money in the long run. The
commission, for example, would
have had to pay about $780, 900
interest on 30-year bonds to
finance its overhead expenses
this year if it had paid them
from the construction fund as
was done in the past, he said.
Under questioning by Mr..
Keefer, Mr.. Kelly made several
statements critical of the old
Democratic administration at
the commission. He said the old
commissioners used borrowed
money to cover up deficits" that
they went into the market and
borrowed money whenever they
needed it,"
Deficit financing was the
custom at the Washington Sub
urban Sanitary Commission in
the past" he added.
A further political flavor was
added to the hearing by the pres
ence of William M. Addison, law
partner and close adviser of
Gov. McKeldin. Mr.. Addison,
who sat at Mr.. Keefer's side
and questioned witnesses, said
he "just came over to help Kee-
fer" He said the Governor had
not asked him to come.
Attorneys James and Ralph
NEiI1nY 80 C;1,,o,.