By John Barrella

Middleborough’s water and sewer funds ran healthy surpluses as recently as 2022, then reversed hard. The town’s own numbers show where the pressure is coming from — and under Massachusetts law, it’s the taxpayer who covers the gap.

The idea behind a municipal water or sewer “enter​prise fund” is simple enough to fit on an index card: the people who use the service pay for the service, and the account balances itself.

Rates in, pipes and treatment and payroll out, and — in a well-run system — a small cushion left over for the next broken main. In Massachusetts, an enterprise fund is regarded as the best-practice way to keep water, sewer, and stormwater operations financially self-sustaining, with revenues and expenses walled off in their own separate account.

So when that account stops balancing — not once, but year after year — it is worth asking why. I have been calling this out, in public meetings, for some time now. I am still waiting on the answers. Consider this the longer explanation of why the question matters.

It wasn’t always this way.

As recently as fiscal 2021 and 2022, both funds ran comfortably in the black — the water fund posting surpluses on the order of $1.8 million and $2.0 million in those two years, the sewer fund roughly $2.2 million and $2.1 million. Then the picture reversed. Beginning in fiscal 2023, the water fund fell into deficit and has stayed there three years running: about $1.64 million in the red in 2023, $939,000 in 2024, and $568,000 in 2025, by the town’s own figures as reported to the state’s Division of Local Services. The sewer fund followed a year later, sliding from a $651,000 surplus in 2023 into deficits of $144,000 and $367,000.

Across those three years, the water fund’s shortfalls alone total more than $3 million. https://dls-gw.dor.state.ma.us/reports/rdPage.aspx?rdReport=ScheduleA.EnterpriseFunds.EnterpriseFunds

Here is the part most residents never learn until the bill arrives: in Massachusetts, an enterprise deficit does not simply vanish into an accounting footnote.

Under the state’s enterprise-fund law, a loss in one fiscal year must be carried into the next year’s budget, and when a fund’s projected income falls short of what it needs to spend, the difference is added to the tax levy and raised through taxation. State guidance is blunter still: a retained-earnings deficit must be made up from the tax levy as a general-fund subsidy unless the town finds another appropriation to cover it. Translated out of municipal-finance dialect: a “self-supporting” utility that keeps losing money quietly stops supporting itself — and everyone’s property tax picks up the slack, whether they’re on town water or a backyard well.

How a utility slides into the red

The single most common culprit is the least dramatic: rates that haven’t kept pace with costs. Raising water bills is politically miserable, so boards defer it, and defer it again, while the cost of chemicals, electricity, treatment, and labor climbs underneath them. The gap gets papered over — often invisibly — until it can’t be.

The town of Sebastopol, California, offers a textbook case playing out in real time. Its water and sewer funds ran net losses every year from 2020 through 2024, which the city itself attributed to revenue shortfalls and rising expenses tied to a delay in implementing water-rate increases — and by 2024 the situation was dire enough that the city had to float a $1.1 million loan to prop up its wastewater fund. A county grand jury and the city’s own oversight committee both landed on the same theme: the deficits weren’t a mystery, they were a series of postponed decisions.

Then there are the causes that have nothing to do with judgment at all. Aging pipes leak treated, billable water into the ground — “non-revenue water,” in the trade — so a town pays to purify and pump gallons it never collects a dime for. A big capital project’s debt service lands on the books. A major account closes. Meter-reading and billing errors quietly undercharge for years. None of these is misconduct. All of them can turn a balanced fund into a bleeding one — and the only way to tell them apart is to open the ledger.

What Middleborough’s numbers actually show

Deficits are common, and the ordinary explanations above are, statistically, the likeliest — rates that lagged, costs that climbed, infrastructure that aged, perhaps a capital bill coming due. The point is not to assume the worst. The point is that the town’s own figures narrow the question considerably, and they deserve a real accounting rather than a shrug. Start with the explanation people reach for first: that rates were too low.

In Middleborough, the facts run the other way.

The town overhauled its water and sewer rate structure a couple of years ago on the recommendation of Raftelis, a utility-rate consultant, and has adjusted rates upward since — so ratepayers were paying more, not less, across the very years the fund ran red.

The town also sells water beyond its borders, supplying Carver under a long-standing inter-municipal agreement and, beginning in early 2026, sending up to 250,000 gallons a day to neighboring Bridgewater during that town’s water emergency — priced, under the deal’s terms, at one and a half times Middleborough’s highest residential rate. On the revenue side, in other words, the arrows point up.

Which leaves the other side of the ledger — and that is where the reversal actually shows up.

Between fiscal 2022 and fiscal 2023, the year the water fund flipped, its expenditures roughly doubled, from about $3.1 million to $6.7 million, and have hovered near or above that level ever since. The sewer fund’s spending climbed just as steeply in proportion, more than tripling from about $1.2 million in 2021 to $3.9 million in 2025. Revenue that rises while a fund sinks points the finger at spending, not at the rate. A jump that large, arriving in a single year and then holding, may carry an entirely legitimate explanation — a capital project moving onto the books, a new debt-service payment, a one-time cost. But it needs one, in writing.

There is an obvious candidate for that explanation, and it is worth taking seriously:

Middleborough is in the middle of an expensive fight against PFAS, the “forever chemicals” found in the town’s wells. The centerpiece is the $33 million East Grove Street Water Treatment Facility, and the total water plan runs past $80 million. If that spending were flowing through the enterprise fund, it would explain a great deal.

But the timeline does not fit. The big projects were not paid for out of the fund’s cash; they were borrowed — the East Grove plant financed through the Massachusetts Clean Water Trust at zero percent interest, with a chunk of the principal forgiven, and the 2025 well and treatment projects funded by further borrowing to be repaid over time by ratepayers. More to the point, that work came later.

The East Grove contamination was not disclosed to residents until January 2024; Town Meeting did not approve the plant until the spring of 2024; ground was not broken until August 2025. The water fund’s expenditures had already doubled a year or more before any of it — in fiscal 2023, which closed in June of that year. The debt service on the borrowing will land on the books later, in the years ahead, not in the year the fund first went red.

And there is a detail that closes the door on the PFAS explanation almost by itself: the sewer fund jumped in the same year, more than doubling in fiscal 2023. PFAS is a drinking-water problem. It has nothing to do with sewer. Whatever drove the step-up hit both funds at once, in the same year, before the treatment plants existed — which is not what a PFAS bill looks like.

In fairness, one innocent explanation does survive all this, and it deserves to be named.

A town holding large surpluses — as Middleborough was after 2021 and 2022 — will sometimes choose to spend that cushion down on capital and design work rather than borrow every dollar, paying cash as it goes. If that is what happened, a deficit year is really a planned drawdown of reserves for infrastructure, which is prudent management, not a warning sign. The bottom-line figures cannot tell the two apart. Only one document can: a breakdown of each fund’s spending into operating costs, debt service, and capital outlay, year by year. That breakdown should exist and, it should be made public.

So the questions are narrow and fair.

Was the fiscal 2023 step-up in spending operating cost, debt service, or capital paid from reserves — and if the marquee projects were borrowed and came later, what actually drove it? Were rate studies done, and were their recommendations followed or shelved? Are the indirect-cost charges between these funds and the general budget accurate, or are they inflating one side of the ledger? Do the funds’ cash receipts reconcile, year over year, against what was billed and what was deposited? These are the standard questions any competent finance review would ask of any three-year reversal.

In Massachusetts, those questions carry an added urgency, because the law has already decided who pays if they go unanswered: not an abstract “utility,” but the taxpayers of Middleborough, on the next tax bill. A fund that is supposed to pay for itself, and doesn’t, is not automatically a scandal. But it is always a question. Middleborough is owed the answer — and so, I’d add, are the residents who keep asking me when they’ll get one.

John Barrella is a former chair and current member of the Middleborough Finance Committee. This is an opinion column; the views are his own. It draws on Middleborough’s enterprise-fund figures as reported to the Massachusetts Department of Revenue’s Division of Local Services, and on Massachusetts General Laws c.44 §53F½.