With disagreement between councilmen at Tuesday's work session, the council voted Thursday on a compromise incrementally raising rates to the level suggested by City Manager Pat Crook. In 2011, hopefully either February or March, base rates will decrease to $6.90 and volumetric rates will increase to $2.75 per 1,000 gallons. In 2012, volumetric rates will again increase to $3.25 per 1,000 gallons.
The need for a rate increase has become more apparent as water and waste water facilities have deteriorated. Maintenance and necessary repairs coupled with mandatory governmental regulations have drastically upped operating costs, sending the water fund into an increasing deficit. City Finance Director Roger Freeman said Tuesday that the water fund will see a projected $187,000 loss this year. An increase in rates was deemed necessary just to keep the system operational and financially solvent.
"I think it's a good decision the council made; it's not one that was entered into lightly for sure. Nobody really wants to raise anybody's rate in this economy for sure, but for the financial liability of the system, it was a necessary action and we are watching our expenses very closely and operating as frugally as possible. This action, while painful, is necessary," said Mayor Evan King.
Three options were presented to the council Tuesday with Crook's recommendation being the highest bringing in a projected revenue of $274,190 and enabling the city to qualify for capital project loans. Two other options were included, the least of which was a "break-even" rate producing the smallest amount of revenue at a projected $21,690 and offering the smallest amount of protection against the unforeseen.
The compromise agreed upon will enact the middle option of $2.75 per 1,000 gallons for 2011 followed by Crook's professional recommendation of $3.25 per 1,000 gallons to be implemented in 2012.
Thursday's decision also included a 25 percent discount for qualifying low-income senior citizens. To qualify, seniors must live in the city limits, be age 65 or older, hold a total gross household income of no more than $15,000 and the account must be at the applicant's primary residence and in their name.
A resident approached the council after the vote passed asking for them to consider disabled individuals living on a fixed income. The council admitted they had overlooked this concern and voiced favorable expectations for the inclusion of a low-income, disability discount.
The vote also included the creation of a tiered rate structure as mandated statewide for the encouragement of water conservation. Rates will increase by a fixed rate for the level of water used. The first tier will be the approved rate per 1,000 gallons up to 5,000 gallons. From 5,001 gallons to 10,000 gallons, the volumetric rate is 75 percent more than the approved rate and an account using more than 10,000 gallons will double the original volumetric rate.
An audit of water department personnel, workload and productivity was also included in Thursday's motion. To find the optimal performance level within that department, Crook was asked to review these factors from January to March and present her findings to the council in April.
Other agenda items Thursday included Group Medical renewal with Blue Cross Blue Shield for the city dental plan and a budget revision for fiscal year 2010 reflecting the aforementioned water fund deficit. Both of the items were approved.