City water budget glance points to need for rate hike

Thursday, January 18, 2018

Pondering a lean 2018 city water budget has whet the appetite for a hard look at a possible water rate increase for city officials.

Greencastle Board of Works members approved the 2018 city water and wastewater budgets as presented at their January meeting but not before hearing City Clerk-Treasurer Lynda Dunbar warn, “It’s getting to the point we may need to discuss a rate increase.”

That won’t come without some kind of rate study, much more discussion and eventually formal introduction of ordinances calling for any rate increase.

The 2018 water budget is based on predicted operating revenues of $2.3 million to be generated under the current rate set-up. Requested operating revenue for the year, however, was listed at $2,785,937.

“So if we spend 100 percent of our budget, it would result in a $400,000 deficit,” Dunbar pointed out.

Historically, however, the city has been spending 75 percent of its budget in recent years. And if that were the case again in 2018, the city would be within $40,000 of spending its entire water budget amount, the clerk-treasurer said.

“If we do nothing,” Dunbar said, “we might break even this year if we only spend 75 percent of our budget.”

However, salaries, insurance costs and other operating factors are “creeping up enough,” Dunbar advised, “that this year we may not even reach the break-even point.”

Without a rate study at her fingertips, Dunbar estimated a 19 or 20 percent water rate increase might be necessary to totally fund the water budget.

The city has not had a water rate increase since 2015 when it had to take on a 47 percent rate hike to help fund mandated new facilities and infrastructure improvements.

Again, nothing has been formally proposed at this point and the 2018 budgets were passed as presented.

One item likely to be studied is the cost to the city of producing water. Dunbar said that discount rates to big water users can result in lost revenue and that those tiers of the water rates may need to be adjusted to produce more revenue.

Mayor Bill Dory noted that water consumption levels have remained flat.

“We have plenty of water to sell to people,” he said, noting that growth in water use in recent years has been balanced out by politically correct measures of conserving water.

There was no suggestion of a rate hike needed for the wastewater budget, which will be about $2.9 million in 2018.

However, if all the wastewater budget is spent, Dunbar noted, it would result in a deficit of $67,000.

“We had an increase (in sewage rates) in 2015 and 2016,” she said. “We could probably ride another year or two without an increase. But we’ve got to do something about water.”

Just a warning for now with no action taken or even formally introduced.

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