Yes, water and sewer rates are going up again. By exactly how much, we don't yet know. What we do know is that a total of $470,000 has to be raised in utility revenues to cover this year's $190,000 deficit-to-debt note repayment and another $280,000 shortfall between budgeted revenues and already cut expenditures. How to allocate that $470,000 over some 3,500 water and sewer customers was the subject of the Selectboard's budget worksession held today.
Don Phillips, an engineer with Forcier and Aldrich Associates hired to advise the town on the rate increase, gave an overview on water utilities budgets around the state. Water usage is declining, he said, due to increased use of water flow-limiting devices by businesses and homeowners. In order to make up the lost revenue in Utilities budgets, he suggested increasing the amount of revenue that comes from the base charge rather than trying to make it up solely in usage fees. This is because the base charge is "guaranteed money" while the revenues from metered usage tend to fluctuate.
In addition, Phillips raised the issue of reserves in a time of crumbling infrastructure. Many towns, he said, have old water and sewer systems and these systems don't last forever. He encouraged the town to consider rebuilding reserve funds for necessary improvements to the Utilities system. Currently the Utilities have no reserves as the remainder was spent over the last few years to finance the ongoing deficit in the Utilities budget, among other things.
Following Phillips' presentation, Treasurer Emilie Thomas presented the town's plan to make up the $470,000 shortfall, which includes a mix of recommendations including increases in base and usage fees for water, as well as an increase in sewer fees.
To pay off the $190,000 which is this year's portion of the $545,00 deficit-to-debt loan, the town wants to do a straight-line allocation of $13.40 per customer per quarter for an annual increase of 53.60 per customer. Emilie Thomas emphasized that this portion of the increase would expire in three years when the loan is paid off. It would be listed on water bills as a separate charge.
Then there is the additional $280,000 which is still needed to bring revenues up to the level of expenditures for the coming fiscal year. To raise Utilities revenue by this amount, the town's recommendation is to raise both base and usage rates. They did their numbers based on a flat increase of $5 per quarter per customer. The Selectboard however seemed in agreement that it would be wise to increase the base rates more at this time. Steve Steidle suggested doubling the base increase from $5 to $10 per customer per quarter. It's not known how much revenue the increase in base rates would raise as the exact number of customers paying the base charge is still not determined.
As for the usage rate increase, Thomas said that if the base increase is set at $5, then the usage rates would have to rise 15% across the board. However, if the town decides to charge a higher base rate, as Steidle was advocating, then the usage increase would probably come down a bit.
During the course of discussion, both Audrey Garfield and Steve Steidle expressed concern that single home owners including many elderly could see a base rate increase of 50% while larger commercial customers would receive much smaller percentage increases. They questioned the fairness of this and wondered if the increases could be allocated in such a way that the largest burden didn't fall on the smallest customers.
Thomas said that they had considered using a sliding scale to allocate the base increase but felt that commercial customers generally pay multiple bills, so they would still be paying more than residential customers. Currently, 75% of town water customers use the smallest 5/8" connection. As currently proposed, these customers would see the largest percentage rise in their base water charges.
In line with the consultant's recommendations, the board directed town staff to increase the base rate, relative to the usage rate, in town utility bills. Town staff will now put together a new recommendation on rate increases, which will be presented to the Selectboard and the town at a special meeting and first reading of the water and sewer rate increase ordinance. The meeting is scheduled for Friday June 16 at noon, in the Selectboard Meeting Room at the Municipal Center.