Council may raise water, sewer rates

May. 20, 2014 @ 09:45 PM

The Henderson City Council began delving into the details of the 2014-2015 budget at its Tuesday work session.

Board members sought to find ways to limit water and sewer rate impacts on residents while still providing good fiscal management for the city.

Council consensus was to raise the regional water system’s rate by 4 percent, the city’s water rate by 3.5 percent and the sewer rate by 3 percent. The board must still vote on the increases when it adopts the budget next month.

Council members Garry Daeke and Fearldine Simmons were absent for Tuesday’s work session.

City Manager Ray Griffin in his recommended budget proposed increases of 3 percent and 5 percent for the sewer and water rates, respectively, which would help mitigate losses in revenue and the impact of volatile utilities and chemicals costs.

But Councilman Mike Inscoe, also chairman for the Kerr Lake Regional Water System Advisory Board, said though the regional system needed to increase revenue, he didn’t want to do it on the backs of Henderson residents. Most of the funds for the system come from the sale of water to the city, Oxford and Warren County.

Inscoe proposed a 4 percent regional water system increase that would only end up causing a 3.5 percent jump to the city water rate.

The rest would be made up from other sources.

An increase of 1 percent to the regional water rate yields about $39,000; a 1 percent increase to the city water rate yields about $27,000.

Griffin noted even with the rate increase, the total regional water fund budget of $4.32 million is less than the current approved budget of $4.43 million.

Water sales are down at all three partners, which means revenue for the regional water system are down as 99 percent of all revenue comes from the sale of water to Henderson, Oxford and Warren County.

Major expenses are electricity and chemicals, which eat up 21 percent of the total budget, and a nearly $800,000 transfer — about 18 percent of the budget — to the capital reserve fund for the planned expansion of the water plant’s capacity to 20 million gallons per day.

In the city’s water fund, revenue is down because water sales are down, Griffin said. Conservation efforts, a wet spring and summer, and the lingering effects of the recession on the Tri-County are among the culprits.

The proposed 3 percent increase to the sewer rate would generate about $111,000; each percent increase provides about $37,000.

Major operating expenses are electricity and chemicals, which cost some $586,000 — about a 12 percent chunk of the sewer budget.

Other major expenses are $140,400 for bio-solids disposal, $21,800 for sewer maintenance and repair, and $45,000 for street patching needed for utilities cuts, Griffin said.

The next budget work session is scheduled for 6 p.m. Thursday at City Hall, 134 Rose Ave. It is open to the public.

The council is scheduled to adopt the budget June 23. The new fiscal year begins July 1.


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