A proposed water and sewer rate change by the City of Elizabethton may not hit citizens’ pocketbooks as hard as originally proposed.
Utilities Director Johann Coetzee presented a revised rate change plan after hearing concerns from City Council members and the public that the original increase might be too much for city utility customers.
The rate increase was proposed as a way to make necessary improvements to the city’s water and sewer system while providing enough revenue for the department to operate.
The original proposal included a $4 increase in the base water rate, a $3 increase to the base sewer rate and 4 percent annual increases in both water and sewer usage rates starting with the 2015-16 budget.
The revised plan would spread the base rate increase over two years. The base water rates would increase by $2.50 during the 2015-2016 fiscal year and $1.50 in the 2016-2017 year. The base sewer rate would increase by $2 in 2015-2016 and $1 in 2016-2017.
The water usage rate would still increase by 4 percent annually from 2015 to 2021. The sewer usage rate would increase 4 percent from 2016 to 2019 and 2 percent from 2019-2021.
“This is our best effort at finding out how we are going to do this,” Coetzee said. “We listened to what you said last time and we are trying to find a way to make this work. We pushed everything one year into the future. It lessens the impact, but we still get to where we were before.”
For the current fiscal year, the city water and sewer is projected to have an $823,559 shortfall in revenue because the water and sewer rates have been “undercollected,” Coetzee said. The expected combined revenue for the two utilities was $8,238,889. The projected actual revenue is $7,415,330, which is 10 percent less than projected.
“This year, we are going to go in the negative on our income,” he said. “If we do that two years in a row, we will have to go to a show cause hearing in Nashville. The state will take over and do a rate change for us.”
The current water and sewer rates were determined during last year’s budget cycle by a study completed by engineering firm McGill and Associates. At the time, the study declared the current rate structure would be sufficient to support the utilities operations and infrastructure needs. However, the amount collected was not as high as predicted, leading to the shortfall.
Over the past three years, the revenue collection has decreased by 5 percent, 3 percent and 4 percent respectively for a total decrease of 11.5 percent on the total revenues.
There were multiple reasons for the undercollection, Coetzee said. One was reduced use from customers after the previous rate increases, along with natural decreased use because of the seasons. The biggest impact came from more water efficient fixtures and appliances in homes.
Councilman Richard Tester questioned why council members should have “confidence” in the numbers presented to them, when the previous rates were not adequate for the city’s needs.
Coetzee told him the city had more data to use for studying the rates which made them more accurate.
City Manager Jerome Kitchens told council that over the past few years more money had been put into the water department, but that it had been focused on finding and repairing leaks in the water pipes. While that work was necessary, he said, other needs were being neglected.
“Simultaneously, there are things that haven’t been discussed because we have been so focused on water leaks,” Kitchens said. “These include the water tanks and the sewer lines. It is time for us to make repairs to these things so we can hand down a system to the next generation that does not cripple them.”
The revised rate structure changes would help the city reach that goal but would not have as much of an impact on the customers all at once, Kitchens said.
“This does not change the direction we are going,” he said.
Coetzee said so far the city has been able to provide quality water to the city’s customers with the system as it was. Now, he said, improvements do need to be made.
“We can work on the budget, and cut things from it, but then it has a major impact on the customer and they will see reduced services,” Coetzee said. “It is my job to give you the best information I can that will enable you to make the best decision you can for the ratepayers.”
Council will vote on the first reading of the budget tonight at City Hall at 6 p.m.