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Martinsville, Virginia 24115
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New utility hikes proposed
As part of city budget plan
Wednesday, April 9, 2014
By MICKEY POWELL - Bulletin Staff Writer
Another utility rate increase could be coming for Martinsville residents and businesses as the city deals with rising expenses and limited revenues.
An 11.2-percent hike in water/sewer rates is part of a nearly $89.4 million budget proposal, presented to Martinsville City Council on Tuesday, for the new fiscal year that will begin July 1.
Each month, the city bills customers for a minimum use of 4,000 gallons of water, plus the same number of gallons for sewage.
Customers using those amounts would see their bills increase by a total of $4.80 a month. The base water rate would increase from $22.31 to $24.10 and the base sewer rate would increase from $20.64 to $23.65.
City Manager Leon Towarnicki said those rates still would be “considerably less” than the average water/sewer rates among area localities.
Charts in Towarnicki’s budget presentation show the averages elsewhere are $29.58 for water and $32.38 for sewer per 5,000 gallons of each used.
Under the rate hike, Towarnicki said, city customers using 5,000 gallons of each would pay $27.29 for water and $26.38 for sewer. Those rates would be 7.7 percent and 18.5 percent, respectively, below the area averages.
The water/sewer rate hikes would generate about $400,000 a year in extra revenue that can be put toward city expenses, Towarnicki said.
Councilwoman Sharon Brooks Hodge said she is “kind of concerned” about raising water/sewer rates, considering the city’s recent history of increasing utility rates.
Water/sewer rates were last raised two years ago. Last year, the garbage collection fee went up. An electric rate increase was implemented in March.
Towarnicki said he proposed raising water/sewer rates because they were the only utility rates that were “far behind” area averages.
Without those increases, he said, the council will have to find $400,000 in budget cuts, create $400,000 in new revenue or do a combination of both.
The recent electric rate hike, which is reflected in the budget proposal, is a little more than a half-cent per kilowatt hour of electricity used. At that rate, customers using 1,000 kilowatt hours monthly — which officials say is about average — will see their bills rise from $105.60 to $110.95 effective May 1.
That increase will allow the city to take in about $1,025,000 extra through June 2015 to help pay an extremely high wholesale power bill it received in January, as well as help pay the city’s costs toward a ceased power plant project and offset anticipated future power costs, officials have said.
Much of the increased cost for January stemmed from higher fees the city had to pay to get the electricity sent to Martinsville over a regional electric grid which got clogged due to the high demand, according to officials.
Councilman Danny Turner voiced concern about the same situation possibly occurring again in the future.
Historically, that is unlikely, Towarnicki said — January was unusually cold.
But if it happens again, he said, “we’ll just have to deal with it. We have no other real option at this point.”
No new increase in the garbage collection fee is proposed, and no hikes in tax rates were put forth.
The city’s real estate tax rate would remain $1.0621 per $100 of assessed property value. That equates to a yearly tax bill of $1,062.10 for the owner of a house assessed at $100,000.
The tax rate on vehicles would remain $2.30 per $100 of assessed value, although the state provides the city funds which ultimately lower amounts that residents on their cars and trucks. The rate for business machinery and tools would remain $1.85 per $100 of assessed value.
Proposed local funding for the city schools is level with the current fiscal year at $6,360,531. That is $736,070 less than what the schools sought.
However, the schools would be allowed to reappropriate up to $160,000 unspent during the current fiscal year for capital needs and new buses in fiscal 2015, Towarnicki said.
An expansion of the Martinsville Information Network (MINet) is budgeted at $185,000. Towarnicki said the city-run, fiber-optic communications network now has 65 customers and another 26 potential customers are on a waiting list for the service or evaluating whether to use it.
As MINet is expanded, initial capital costs would be recovered through multi-year contracts with new customers, he said.
Slightly more than $2.1 million in capital requests are proposed to be funded, including utility projects.
The spending plan includes a 1 percent pay hike for city workers to make up for an extra 1 percent they must contribute to the state retirement system.
It also includes “small raises,” city Finance Director Linda Conover said, to bring salaries of 46 employees up to minimum levels reflected in the city’s pay classification plan, based on job market conditions.
The budget proposal reflects total expected revenues of $86,412,994 but total anticipated expenses of $89,386,153. It uses $1,823,159 in reserve funds to balance the budget once $1.15 million in equipment depreciation expenses are factored in, a report in the budget presentation shows.
For the past few years, the city has dipped into reserve funds to balance budgets.
Towarnicki said the city continues to see “many of the same (financial) challenges seen in previous years,” including expenses and departmental budget requests exceeding revenues.
The city would need an extra $4,007,594 to fully fund the schools’ request and all capital requests without using reserve funds, he said.
Figuring out “how to fairly allocate limited resources to cover a wide array of needs” is challenging, Towarnicki said.
Another challenge this year, he said, was creating a budget without knowing how much state funding Martinsville will get. The General Assembly has not yet adopted a state budget, so the spending plan assumes level funding.
Taxpayers must be involved in the process along with the council, he said.
Likening the city to a company, Towarnicki said “citizens must realize they are the stockholders of this company and the upcoming budget process represents their annual stockholders meeting. Input from all is critical.”
The council scheduled a public hearing on the budget proposal for May 13. Afterward, it will consider adopting a final budget on first reading.
Budget work sessions were scheduled from 6-9 p.m. Thursday as well as April 23 and 24.
Thursday night’s session will deal with school and outside agency funding requests.