City talks rate hikes

Written by Observer Upload March 14, 2013 08:58 am

by Bill Rautenstrauch/For The Observer

There’s a good chance water and sewer rates will be going up in La Grande soon, and continue to rise through the next decade.

During a work session Monday night, the La Grande City Council heard a report from Howard Perry of the local engineering firm Anderson-Perry & Associates. Perry presented information on a recent study of the water and sewer systems, one that recommends a 5 percent hike for sewer in each of the next 10 years, and 10 percent for water.

Perry said he knows a decision to raise rates is always controversial, but added that failure to do so can be disastrous. He talked about a mayor of another city who boasted that rates hadn’t been raised in 10 years, and then discovered that the water and sewer systems were in need of millions of dollars in repairs and upgrades.

“Water and sewer rates are a difficult thing. Sometimes the user doesn’t understand why they need to be what they are,” Perry said.

Perry said the proposed increases are needed to cover costs of capital improvements, and also to keep the city’s sewer and water reserve funds healthy. He noted that in five years, the city will have to build a water treatment plant costing $5 million.

Currently, the base residential sewer rate stands at $36.24. If the city council decides to go ahead with the proposed increases, that rate would increase to $38.18 in the coming fiscal year and gradually rise to $48.72 by 2022-23.

Water rates vary depending on use, but this year’s residential base rate is $15.08. The base rate would go up to $16.59 in the coming fiscal year and reach $32.33 by 2022-23.

Perry said water and sewer expenditures exceeded revenues the last several years, and there’s been an ongoing need to dip into reserves. Reserve funds are used to cover emergencies. Also, if there is a need to incur debt for improvements, a healthy reserve fund makes for a more favorable interest rate.

Under the proposed increases, the sewer reserve fund would reach a targeted level of $3 million in 2019-20. The water reserve fund would reach a target of about $2.4 million in 2020-21.

Currently, reserves are under target for both water and sewer. This fiscal year, the ending water fund balance is projected to be $894,398. The sewer fund ending balance is $2.1 million.

The purpose of a city council work session is to informally discuss issues and exchange ideas, not to make decisions or direct staff to a specific action.

The council accepted Perry’s report with little discussion, though Mayor Daniel Pokorney seemed to be against the proposed increases. He said it’s good to have a healthy reserve fund, but wondered whether this is the right time to up the rates.

“What we’d like to have and what is possible in these economic times are two different things,” he said.water