Utility rate increase debated by Alva City Council
May 17, 2023
A proposal to pause a scheduled utility rate increase for the next fiscal year, beginning July 1, was debated during the Alva City Council meeting Monday night. By city ordinance, the utility rate increases by the same percentage as the CPI (consumer price index) rate each fiscal year unless the city council votes otherwise. Councilmembers Taylor Dowling and Troy Brooks requested that a pause in the increase appear on the agenda.
Brooks stated he was submitting Resolution No. 2017-009, section 3 to pause the scheduled increase in utility rates for the fiscal year 2023-2024.
Councilmember Taylor Dowling said every year utilities go up and the city budget increases. He said statistics show household income in Alva is much lower than the national average and household income is predicted to increase by only three percent in the next year.
"So you're talking about increasing the cost of living on a figure that is supposed to represent what the cost of increase is," commented Dowling. He said he believed the council could find room in the budget so the city didn't need the increase.
"Mr. Dowling can you tell me what is the anticipated increase of waterline costs as well as parts, supplies, maintenance on vehicles, what's the anticipated increase over the next year?" asked Councilmember Daniel Winters. "It's a wonderful question," said Dowling. "It's hard to ..."
As he paused, Winters asked, "Would you say it's the CPI, on average, it's the CPI?"
Brooks said, "CPI is like the pain index. The public is having to pay that. And we're having to pass on another increase to the public."
"So are our expenses going to go up the same as the CPI? Would you say that's accurate?" asked Winters.
"Same as the public's is," answered Brooks.
"So would you then say we need to have additional revenue to cover the increased costs and expense?" asked Winters.
"I think we should find other ways of raising it. It's basically like a tax on the public that is put in to automatically go up every year based off the CPI. I mean if the public doesn't like, I don't like it," Brooks said. He said the increase was "a fairly new thing that we've instituted" and asked the mayor how long it was been in force.
"It's been going since 2017," said Mayor Kelly Parker. "Well the ordinance was passed in 2017. It's actually been going since 2021, I believe, the CPI portion of it." When the ordinance was passed, the first years had specified increases before the annual CPI increase took effect.
"Here's the thing, and this has gone back well before any of us were sitting at this table," said Parker. "Here's the thing. If the notion is that we can't increase rates, then our infrastructure gets to be in the disrepair that our infrastructure is presently in. And we've got $80 million, probably more than that, we've got $80 million worth of waterline replacements that need to happen on a schedule, not just when they break, and wellfield improvements and all of these things. And you don't get there, you can't even start eating that apple, if you're not bringing in enough revenue to pay for the increased costs of us providing the service."
Objecting to Brooks' suggestion that the increase was like a tax, Parker said, "It's not a tax. Everybody that pays that gets water. Everybody gets water, and the cost to treat it chlorine has gone up every year. The cost it takes us to put a mile of line in the ground has gone up every year. The cost that it takes us to pay our staff has gone up every year, to pay for their insurance and benefits and everything else. It's not a tax. This is a fee for a service.
"And if we don't have fees for our services, then we have to cut out other parts of our budget. And if we're going to do that, I want to know what are you suggesting that we cut? Because otherwise if we're not having suggestions we all agree on about what comes out of the budget, then we have this in place to make sure we're funding our essential operations."
Councilmember Joe Parsons said, "I think what I'm seeing and what I've had people tell me, and I think I've had people use words such as 'creative accounting', and I've told them no this is not the case. I think what I'm seeing is their thought process is the money that is brought in from utilities should be used for utilities. If they feel like it is being used for general operations, then they feel like why the raise."
Councilmember Sadie Bier said, "That's how cities run. They don't get state funding. Cities have to run off utility billing and sales tax."
"That's what my response is to them. Yes, if you want all the revenue used on utilities, we need it," he said. "Would you like to see a sales tax increase? And most of them are, oh no!"
Parsons asked what happens the next year if the rate increase is paused. Bier explained it can be voted on annually. If no action is taken, the CPI increase happens automatically.
"I don't think it should be automatic. We should go on record voting on this every year. So everybody's on the record, where they stand on it," said Brooks.
Winters pointed out that the city needs income from utilities to help provide other services that are not income-producing like the fire department and police department. "Its intention is to bring in money to cover its own expenses as well as non-income producing entities of the city. Otherwise, we do have an astronomical sales tax rate," he said.
A couple of times when discussion strayed from the agenda topic, Mayor Parker brought it back to the topic.
Parsons was under the impression that the minimum utility charge included a set number of gallons. He suggested keeping that rate the same and just increasing the cost per gallon above that minimum. He was told the minimum charge does not include any water usage. He suggested that could be changed so those who use little water won't be hit so hard.
Brooks said he expected a lot of complaints that the city was spending $1.4 million on artificial turf at the Alva Recreation Complex (ARC) while raising utility rates. Parker said ARC money comes from a different pocket. The sales tax going to the ARC is earmarked and can't be used for other city expenses.
Brooks made the motion to pause the utility rate increase for the next fiscal year, seconded by Dowling. Brooks, Dowling and Parsons voted in favor while all other councilmembers voted no. The motion failed 3-5 so the utility rate increase is still scheduled to go into effect July 1.
Winters commented that if he had been presented with specific line items to cut, he might have voted differently.
A video of the Alva City Council meeting may be viewed at http://www.AlvaReviewCourier.com. Click on the Video tab.