Debt Payments, Infrastructure Costs Drive Proposed Water Rate Increase
Jan 21, 2026
The Bar Harbor Story is generously sponsored by Window Panes Home and Garden.
BAR HARBOR—Bar Harbor officials are moving forward with a proposed water rate increase of roughly 35 percent as the town works to close a $1 million gap in its already-approved water budget, driven largely by debt payments tied to a voter-approved infrastructure bond and rising operating costs and improvement projects.
Public Works Director Bethany Leavitt and Finance Director Sarah Gilbert presented proposed water rate increases again to the Bar Harbor Town Council, January 20.
The rate change comes after an approximately $1 million shortfall in the budget that the town council has already approved. Much of the difference is comprised of a debt payment, which the town cannot default on.
“We’re looking to make up about $1 million in that approved budget,” Leavitt said, Tuesday.
The past shortfalls have been made up by using the reserves, she said, which have dwindled.
Due to a glitch in the recording of the presentation, it cannot currently be viewed on Town Hall Streams, which is where most of the town’s major meetings are stored after they are recorded.
The council unanimously scheduled the public hearing for February 17.
The budget itself does not go through the typical process. Neither does the town’s sewer budget. These budgets do not go before the town’s voters after first being looked at by the town council and warrant committee. Instead, these budgets are approved by the town council.
The council has approved a $3.2 million water budget. The revenue is just $2.2 million.
That equates to a $1 million gap.
Town staff and Olver Associates, a hired consultant, believe that the 35% (approximately) rate increase on all meter sizes helps to create more equitable distribution.
The town council’s goals in the past year included making the town more financially sustainable for the long-term along with looking at existing utilities—such as sewers, roads, sidewalks, waterlines—and also the cost of maintaining resources and how to do so in a fair way.
The town’s water system has been a part of that “look” even prior to this council. The public works department and finance department both studied the water system’s rate structure, its system, and with Olver Associates, came up with options. The best option, they believe, is the approximate 35% rate hike, which they believe will impact residential users less than larger commercial or larger nonprofit users. Payment tiers have been combined as well in the new plan.
If the rate change advances past the council, that option has to go before the state Public Utilities Commission to be approved.
THE REASONS FOR THE SHORTFALL
A significant part of the shortfall in the water budget comes from the town’s debt service for a voter-approved Priority Infrastructure bond.
In June 2022, voters approved a $43.9 million sewer and water bond to upgrade the sewer and water in town. Part of that money is also for a streetscape project on Cottage Street, which was designed in 2017. Cost increases to people’s water bill occur as the bond is repaid.
That bond sold in August 2023 and in finance reports and other reports to the council, Public Works Director Bethany Leavitt and Finance Director Sarah Gilbert have talked about how the bond payment will likely impact water rates, mentioning a likely 34.3% increase in a FY 2024 water budget presentation back in 2023.
Other causes, according to town staff, are inflation, increases to staff salaries, increase in capital investment. The budget shortfall also stems from other planned capital improvement projects.
There are no simple issues in utilities. Old metal pipes are throughout the region, not just Bar Harbor. Meant to last 100 years, their replacements’ longevity can be impacted by soil conditions, manufacturers, contractors who installed them throughout island towns. Deferring utility work often means deferring sidewalk work and road repairs.
Bar Harbor has been working to replace water mains and underground infrastructure in ways that coincide with state or town road projects. That way a road isn’t dug up multiple times for multiple different projects.
Higher volume users had a lower cost per cubic foot under the past system. Advocates for the new rate structure say that higher volume use is no longer incentivized because larger meter and volume accounts have larger impacts under the new plan than smaller users.
THE POTENTIAL IMPACT
For a customer with the smallest meter (⅝”), who consumed 8,314 cubic feet this year, they currently pay an annual total of $480. That same customer would now pay $621, a cost increase of $161 or 35%.
According to staff, a user with a ⅝” meter who is using close to the minimum would see a $26.66 quarterly increase, which would be approximately $8-12 a month, or a $106.64 increase.
However, a larger user with a 6” meter who used 1,687,085 cubic feet of water would see their bill increase from $30,594 to $57,823, an increase of over $27,000 or 89%.
Users with 3” and 4” meter in comparisons shown by staff often had increases of annual cost between 89% to 174% depending on consumption.
The proposed rate structure has multiple tears for year-round and seasonal use. Seasonal users pay higher rates than year-round users with the same size meters.
The differences (beyond the simple 35%) are due to tier changes and overage changes.
OTHER BUDGET WORK THIS WEEK
Both the AOS budget (which voters can approve or not at the meeting) and a joint council and warrant committee meeting are scheduled for this week.
The central office budget meeting is on Wednesday, January 21 and begins at 6 p.m. It will be at Mount Desert Island High School, 1081 Eagle Lake Road in Bar Harbor.
This is meeting for the residents of the Towns of Bar Harbor, Cranberry Isles, Frenchboro, Mount Desert, Southwest Harbor, Swan’s Island, Tremont, and Trenton to vote on the budget for central office costs.
Much like the county budget and high school budget, once this budget is approved, it becomes a part of each towns’ property owners’ tax bills.
The joint council and warrant committee workshop is Thursday, January 22, and it will be the first joint look at the town’s budget, which can be tweaked by the council, tweaks can be recommended by the warrant committee, and the ultimate say in the budget’s approval will be with voters in June.
LINKS TO LEARN MORE
Council/Warrant Committee Budget Workshops:
- January 22 – Introduction of the municipal budget by Manager and Finance Director
- January 27 – Introduction of the School Budget
- January 29 – Discussion of outside agency requests
Bar Harbor’s Comprehensive Plan documents
Bar Harbor’s Existing Conditions Report
AOS 91 Budget Would Increase Central Office Spending by 7.25%
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