I watched the presentation at Monday night's Council meeting regarding the 2nd reading of an ordinance to increase water rates by 14%. I appreciate the efforts of Stehly, Ehrishman and Staggers to inform the public but let's be realistic. It was said people aren't aware of what's going on. Maybe there is no backlash from the public on these rate increases because it's not an issue for them. People get fired up when they think something is unreasonable or doesn't make sense to them or it is seriously affecting them financially.
I am not convinced there is a groundswell of discontentment and dissatisfaction with the city's planning and forecasting the future needs of it's utilities. I didn't see testimony from a huge contingency of citizens testifying against the proposed rate increases. Yes, the actual per cent increase each year is certainly higher than their inflation target, but the city has explained why that is and what is necessitating the rate increases.
Believe them or not, call for an audit to see if there is waste, whatever. The fact remains that these are the professionals and they provide the necessary information to the city council to justify their proposed actions regarding these "businesses." The city council's audit team can call for an audit if they deem it necessary. City funding and it's financial structure is complicated and the premise that there is waste and to just take money from the 2nd penny sales tax is naive.
Let's be clear on some facts regarding funding. The Sales and Use Tax (2nd penny) is the city's primary capital account excluding public utilities. Enterprise funds are used to report the same functions for its public utilities - electric light, public parking, sanitary landfill, water and water reclamation operations.
These public utilities are classified as "enterprise" because they are run like a "business." They are not funded with the same source of money as the general fund departments. These enterprise fund departments charge fees to generate revenue to pay for their "business needs."
The Enterprise funds relating to water, water reclamation, sanitary landfill and electric light departments are used to cover the true costs for that specific enterprise (business) including operation, maintenance, periodic capital improvements, new capital acquisitions and improvements, and debt service requirements.
The premise that money from the Sales and Use Tax Fund (2nd penny) should be shifted to the Enterprise funds of these utilities to offset rate increases destroys the "business" operation and funding model of these utilities. In addition, it diverts 2nd penny sales tax from it's intended purpose of being the primary capital account for general fund operations, i.e., streets and highways, police and fire, parks and recreation, libraries, etc.
Utilities are run as businesses and their revenues must support their operational, maintenance, capital needs and debt service requirements. These rate increases are just not for water usage. The comprehensive rate and water needs analysis conducted in 2005 and updated by an independent engineering firm was and is being done to account for ongoing costs of operations, the financing of the City's LCRWS pre-payment, and additional capital replacements and expansions to meet the City's entire water resource needs.
It's unfortunate that we as consumers have been and are faced with double digit rate increases in our utility bills. In hindsight, no rate increases for ten years has certainly contributed to the rate increases we are being faced with today. I doubt it is the only contributing factor. However, the fact remains that, as citizens, we expect a quality product flowing from our faucets. We expect our city officials to operate this business efficiently and we expect them to maintain the infrastructure of this business and to plan for new expanding infrastructure.
In this case, the city cannot win for losing. I may not like the increase but at least I understand why it must be done. Unfortunately, it's a necessary evil of running the city business called "water." We complain when they increase our rates to fund the "business" and we would scream bloody murder when the drip, drip drip dries up.
Source: 2010 Comprehensive Financial Report