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Proposed city rate hike funds needed, official says
Tuesday, April 22, 2014
By MICKEY POWELL - Bulletin Staff Writer
The estimated $400,000 that Martinsville’s planned water/sewer rate hikes would generate in the coming fiscal year is not allocated for anything specific, but the city needs the extra revenue, according to an official.
“We wouldn’t raise rates just for the heck of it,” said Finance Director Linda Conover.
Water/sewer rates are slated to go up by 11.2 percent under the city’s proposed budget for fiscal 2015, which will start July 1. Customers using the minimum billed amount of 4,000 gallons of each per month would see their water bills increase from $22.31 to $24.10 and their sewer bills increase from $20.64 to $23.65. That would be a total increase of $4.80 monthly.
The additional money would go into the water and sewer funds and toward operating, repairing and maintaining those utility systems, Conover said.
City operating costs are expected to keep rising in the new fiscal year, but not as much as in recent years, according to City Manager Leon Towarnicki.
Martinsville City Council ultimately will decide whether to raise the rates. If the council does not do so, officials will have to find $400,000 in extra revenue or make the same amount in budget cuts, Conover said.
“I wouldn’t know where” to find extra revenue, she said. “If I knew where ... I’d have put it in” the budget proposal.
As far as making budget cuts, Conover added, “we (officials) would have to sit down and go back to the drawing board” and figure out, for example, if a project or other budgeted expense could be postponed and if so, how that would damage or otherwise hinder city operations.
Martinsville bases minimum water/sewer use on 4,000 gallons. Most localities — including ones nearby — base it on 5,000 gallons.
For 5,000 gallons, Martinsville customers pay $25.50 for water and $23.37 for sewer. Those rates are 13.8 percent and 27.8 percent less, respectively, than the averages of what other area localities charge, city officials found.
Under the rate hike, 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 less, respectively, than the area averages.
In analyzing the rates, city officials surveyed Henry County, Danville, Rocky Mount, Boones Mill, Bedford and Eden, N.C.
Average rates among those communities are $29.58 for water and $32.38 for sewer per 5,000 gallons, information in the budget proposal shows.
Rocky Mount has the cheapest rates in both categories. Boones Mill has the highest water rates and Bedford has the highest sewer rates, the information shows. However, exact rates for those localities were not specified.
Compared to regional averages, Martinsville’s water/sewer rates traditionally have been low for two main reasons, according to Towarnicki.
One is that most of the city’s water/sewer infrastructure was installed many years ago, so “consequently these two utilities carry practically no debt,” he wrote in a memorandum accompanying the proposed budget.
Ongoing costs for the system mostly are operational costs, he wrote.
For many years, too, Martinsville had industries that used water in high volumes, so rates could be kept low due to the large amount of money received from those companies, according to Towarnicki.
He did not name specific firms.
But “those industries are now gone,” he wrote, “and the city must ensure adequate resources are in place to address ongoing capital needs as the infrastructure ages,” hence the need for rate hikes now.