Council: 10 percent water rate increase not large enough
Despite learning that the city water department isn't running in the red as much as he thought, Mayor David Anderson maintained water rates need to increase by more than the recommended 10 percent next year if the department is to meet its operating expenses and pay off its debt.
At a special meeting Tuesday, City Administrator Gerald Cooper provided numbers showing the water department is not running in the red $250,000 as Mayor Dave Anderson stated at recent council meetings. Cooper explained that Anderson and some council members were apparently figured money gathered from monthly water bills as the only source of water department revenue. The department makes significant money from the sale of water meters, late fees and other charges and is running $100,000 in the red. The city council was forced to borrow that amount earlier this month from its utility reserve account so that the department could meet its 2001 expenses.
Anderson admitted his error, but he and members of the council said the numbers they are presented are confusing.
"I apologize," the mayor said. "I've been talking about this $250,000 deficit for months and nobody has stopped me. We as a group don't look like we're communicating. How in the world can you run a city when you don't know what the numbers are?"
Cooper acknowledged the city's computer system produces confusing numbers. He said he is working with a consultant to streamline the process.
Anderson has maintained the city needs to raise water rates so that it can quit subsidizing the water department. The city's 2002 budget includes a 10-percent increase in water rates, but that would still require the city council to borrow $100,000 next year so that the water department can meet its obligations.
City Engineer Mike Brungardt provided the council with rate-increase alternatives designed to correct the city's current policy of rewarding larger users with lower rates. Currently, customers who use 1,500 gallons of water a month or less pay 67 cents per 100 gallons. That fee decreases to 38 cents per 100 gallons for those using 1,501 to 4,500 gallons a month, 34 cents per 100 gallons for customers using 4,501 to 10,000 gallons a month and 26.5 cents per 100 gallons for customers using 10,001 gallons or more a month..
When pressed by council member Linda Zindler, Cooper reminded the council of its decision to make rates more equitable. The most aggressive way to do that would be to adopt a proposed rate structure that would charge all customers 36 cents per 100 gallons.
All the proposals Brungardt presented Monday would provide 10 percent more revenue from water bills next year. Anderson said that wasn't enough to avoid borrowing another $100,000 next year, nor would it repay the $100,000 loan the city borrowed to subsidize the department this year, he said.
While John Taylor voiced concern about what a large increase would do to low- or moderate-income residents, a majority of the council agreed with Anderson.
"Ten percent won't work," Council member Emil Urbanek said.
No action was taken at the special meeting, but Brungardt was instructed to develop rate schedules that would have the water department breaking even next year and repay the recent loan.
Water rates will be discussed again Thursday, but Brungardt said he might not have proposed rate schedules ready until next month.