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Paris residents may see their water rates go up, but it won’t happen until after the summer.
After discussing proposed water and sewer rate increases, the City Council decided Monday to table the matter again – this time until September. Councilman Benny Plata had asked to table the issue earlier this month.
“If the big users of water have become more efficient, and people are trying to be more conservative, why can’t the city look for ways to be more conservative as well? That’s what people are asking me,” Plata said. “Every time something happens, you raise rates.”
The city’s contracts with Daisy Dairy, Lamar County Water Supply, Campbell Soup and Direct Energy require the city to hire an independent consultant who conducts an annual cost-of-service study of the water department. This study, which costs around $25,000 a year, determines those contract water rates, as well as water and sewer rates for all the other customers.
The contract customers have gotten more efficient, resulting in less water usage. Because the water department has to generate enough income to operate, that means a rate increase for everyone else. The average residential customer would see a monthly increase of $5.69 while the average commercial customer would see a hike of about $4.96 a month.
Each year, the budget includes $1.1 million transferred from the water fund to the general fund to cover costs of administering the water department. Councilman A.J. Hashmi asked if that amount could be reduced so more money was left with the water department and reduce the amount needed from customers.
Finance Director Gene Anderson said that would not work. That transfer is part of the cost of service. Reducing the money transferred would actually result in a lower cost to provide the service – which would mean lower rates for the contract customers and potentially even higher rates for the others.
Also, credit rating agencies like the fact that the city conducts the study each year, Anderson said. Failure to follow the policy and approve the increased rates could hurt the city’s credit rating.
“If we don’t adopt a rate that maintains our rate study policy and the reserve, they will downgrade us simply because not following our own policy,” Anderson said.
Hashmi asked what difference it might make if the rate increase could be tabled until October and reexamined in light of the summer’s usage, since the hotter season is usually a time of heavier water use. Anderson said three months would not make much difference because the study includes three years of data.
Anderson said the city would probably have to bear the entire cost of a second rate study. The contract customers pay for most of the initial study, but he said they likely would not agree to foot the bill for a second one when the first one was sound.
“If there’s anything we could have done to avoid this, I wouldn’t want to be up there taking the grilling,” he said. “We haven’t had a water increase since 2011. We don’t just automatically have a water increase. We only do it when absolutely necessary.”
Fifteen to 20 years ago, the city put itself in a bind by not approving recommended rate studies, Anderson said. In 2003, the water fund went $2.6 million into the red.
“Staff recommends the increased rates be approved on the basis it is needed to maintain the financial integrity of the fund,” he said. “I don’t want to see us from a financial integrity standpoint go back to that situation where we make rate decisions based on politics – for lack of a better word – instead of facts.”
Plata said he has heard from people in the past who called to complain about rate hikes and were told it was the council’s doing. He said he wanted Anderson to “be honest with the people who contact you” and say it was staff’s advice to council.
“I don’t have a problem with that,” Anderson said. “I’m here at a public meeting. It’ll be on the front page of the paper tomorrow.”
City Manager John Godwin suggested making it part of the budget workshops this summer.
“This is a big deal. We get that,” he said. “We can blame it on Gene and the numbers, but in reality it’s you guys who will get the nasty phone calls.”
Councilman Edwin Pickle made a motion to have the new rates go into effect Oct. 1, seconded by Mayor Matt Frierson. Councilman Aaron Jenkins voted for the motion, which failed 3-3. Mot go to these rates effective Oct. 1
“I don’t think any of us are jumping up and down in excitement for any of this,” Frierson said. “We are coming into the hottest months of the year when water consumption goes up. I would feel comfortable approving it, but with a later date so consumers can have some relief.”
Plata made a motion to table the water rates until September. Hashmi seconded, and the vote passed.
In other business, the council: