Committee: Delay rate increases

Sean C. Morgan

The city Public Works Committee is recommending to the City Council that it hold off on any changes in sewer and water rates until after the first of the year.

If the council follows the recommendation, rates won’t change. The council has been mulling various rate proposals to change rates but has not acted on any yet.

The Public Works Committee, really a subcommittee of the council, is composed of councilors Jeff Goodwin, Greg Mahler and Ryan Underwood. Goodwin has proposed rate alternatives that include eliminating the discount for the first 400 cubic feet of water and sewer usage each month.

By eliminating the discount, which provides the first 400 cubic feet of water each month at no additional charge beyond the base charge, $54.60, the city could charge less overall per 100 cubic feet. Goodwin has argued that decreasing the cost per 100 cubic feet overall would spur more overall water usage, covering the differences in revenue from reducing prices.

Other councilors were skeptical that water use would increase enough to cover the difference, leaving the utilities short of funds needed to operate. At the same time, the council has been reluctant to raise rates, which under some proposals would go up by about $10 per month on every account.

On July 28, Goodwin’s proposal to change the rate structure failed for lack of a second, and the council took no further action on rates, instead sending the question to the Public Works Committee, which met on Aug. 29.

During that meeting, Goodwin told the committee that eliminating the 400 cubic foot discount is critical. The price for water is flat to 400 cubic feet and then it increases sharply the more users consume.

The discount results in much less water usage because those who use more pay more per unit, he said. Flattening the rate among usage levels is more like what other cities are doing.

“That single change would make a profound change for the future,” Goodwin said.

Mahler asked Public Works Director Mike Adams where the city would be if it didn’t change the rates at all this year, whether the utilities would be in the red or black.

Adams said that current rates would cover the cost of operations for the year, but the water budget, for example, would have $3,631 left at the end of the year in a $2 million budget. That doesn’t reflect potential new customers.

“If we’re in the red, we need to talk,” Mahler said, but with the police levy going to a vote in November and being so important, he said he is concerned about increasing rates on Sweet Home residents beforehand.

Underwood asked Adams if the city budget is based on an increased rate.

The budget is an estimate based on one option, Adams said. “Going through that process didn’t obligate you to it.”

If the revenues don’t come in, the city won’t spend them on expenses it planned, he said. If the council chose not to increase rates now, “we would just watch it accordingly.”

If he detects a problem materializing, he would inform the council, he said. That’s something that city staff would do even with a rate increase.

“I don’t think I want to revamp the rate structure this year,” Mahler said.

Adams suggested maintaining the current rate and then re-evaluating after the first of the year.

Underwood agreed.

“Looking at the big picture, I think that’s probably in the best interests of everybody right now,” he said.

City Manager Craig Martin said the council could also stagger rate adjustments throughout the year to help customers adjust to them.

“We can handle this year,” Adams said. “But if, at any time, you’re not collecting your full expense, you’re not preparing for the future.”

“We need to increase revenues,” Mahler said. “There’s no doubt about it. I’m torn, Mike, because I know where you’re coming from.”

He said he’s concerned about the timing of it, with the upcoming police levy election.

In other business, the committee will recommend to the council that the date for sending late notices on water and sewer bills be moved to the 20th of the month instead of the 15th.

Goodwin asked the council to consider moving the date during the Aug. 11 council meeting, and Mayor Jim Gourley sent the proposal to the Public Works Committee for consideration.

The 15th is early in the month for late notices, he said. Some people pay later for different reasons, such as a two-paycheck cycle each month. The notice is “threatening” to those who receive it but pay their bills.

“I’ve sent the check and gotten the notice,” Goodwin said. “The city just wasted 50 cents.”

The bill is considered past due, and the city imposes a $2 late fee and 1.5 percent interest on the final Wednesday of the month. Water is shut off on the second Wednesday of the following month.

The committee agreed to move the date for late notices. The decision doesn’t change any other dates or extend the billing cycle.

The recommendations were scheduled to go to the full City Council at its next regular meeting on Sept. 8.