The administration at Central Michigan University managed to reduce water consumption by nearly 10%. But to make up for lost revenue, the city of Mount Pleasant may need to raise water fees for everyone.
According to a report by writer Hilary Farrell:
Central Michigan University’s water conservation efforts caused Mount Pleasant to lose an estimated $50,000 in revenue.
The City Commission is working on several incentives to reduce costs and bring in revenue for 2010 and beyond, said Finance Director and Assistant City Manager Nancy Ridley.
Mount Pleasant’s enterprise funds in the 2010 budget are hit by several factors, including CMU’s conservation efforts in residence halls and other buildings. CMU is estimated to have used 20 million fewer gallons of water this year.
Mount Pleasant sold 834 million gallons of water in 2000 and 740 million gallons in 2008, [City Finance Director] Ridley said. The estimate for 2009 for the city is 670 million.
“This is a fairly significant decline in revenues.”
Water conservation efforts, such as low flow fixtures and last summer’s cold and wet weather, contributed to decline in water sold by the city, she said. The same factors have affected cities statewide.
The closing of the Mount Pleasant Center also will affect water sales next year, Ridley said. The city will sell an estimated 23 million fewer gallons next year with the closure, she said.
You can’t fault Central Michigan University either for saving water or reducing costs. Reducing consumption and lowering expenses are both laudable objectives. And it’s hard to blame the city of Mount Pleasant, who has charged by the gallon for eons and needs water revenue to pay their bills. A proposed fee increase of 2% would help cover these losses, but effectively punish everyone else for CMU’s efforts.
The situation hardly seemed fair to anyone involved. Yet, instead of focusing on the outcome we should think through the process. There’s more to the relationship between the city and the university than buying water. If Mount Pleasant had known about CMU’s conservation plans years in advance, they might have been able to conduct better budget projections. If Central Michigan University was consciously aware of their contribution to city water revenue, they might have been able to develop a more constructive plan.
It’s fairly safe to assume that Central Michigan University wasn’t totally oblivious to how large of a percentage of water they were buying. In any college town, it’s clear that the college has a lot to do with just about any industry, and any major changes are going to have large ripple effects. The issue is whether they cared to inform anyone of their plans. In this situation, clearly not.
But that illustrates a big point. As a business owner, you can’t assume that anyone is going to care about your needs as much as you do. You’re going to be the number one person looking out for your own interests. Which is why it’s important to always take the time to fully analyze a situation and make plans for the future. What if your biggest client moves on? Is that going to completely destroy your company? Hopefully not. But if you’ve looked at things and realize that may be the case, then it’s probably time to re-focus and protect against that sort of worst-case scenario. Preparation is key.
We have covered consultants using process-oriented thinking before as well as what happens when your business process solutions are too good. Helping people think through stakeholder conflicts and workflow challenges is our business. If you’re looking to balance incentives, contact our business consulting team. We’ll help you think and work smarter.