Water rates for Washington residents likely need to be raised to prevent the water fund from running out of money.
City Administrator Jim Briggs spoke at Tuesday’s board of public works meeting about the state of the city’s water fund.
Briggs said the fund will face some budget shortfalls in the future and could be operating at a deficit as early as 2020.
Briggs told the board he felt it was important to discuss the rates before he retires next month. He didn’t make any recommendations, but said he simply wanted to bring the situation to the board’s attention.
The city’s water rates were last changed in 2010. The increase was phased in over a three-year period.
According to numbers prepared by Briggs, the water fund had revenues of $1,562,760 against expenses of $1,144,153 in 2016. The fund ended the year with $1,850,492.
So far this year the fund has produced revenues of $583,400 and had $456,636 in expenses. The fund is projected to have $867,911 in it at the end of 2017 — partly because of $891,970 budgeted for capital projects.
By the year 2020, Briggs projects the water fund to end the year with a deficit of $116,200.
Briggs said a big reason for the projected shortfall is the water meter program. Revenue from the first year of the city’s new water meter program was less than the original estimations.
Back in early 2012, the city approved a $4,610,000 project to install new water meters throughout the city. The project involved installing roughly 6,700 new residential and commercial water meters that were linked directly to the city’s computer system at city hall.
The city originally thought the increase of revenue promised by Siemens, the company that installed the water meters, would cover the debt service. However, Siemens told the board last year fewer meters than anticipated needed to be replaced.
The wastewater fund is in better shape, Briggs said. In his five-year projection, it was not expected to be operating at a deficit.
The board recently discussed the possibility of adding a new water tower in the east end of town. A hydraulic study recently completed for the city found that area would need a tank in the near future.
Briggs said if the board is planning any future water projects, it’s probably time to start looking at raising the rates. He said in order to have funds to pay for a project, like a new water tower, the water fund needs more revenue.
“The rates should support the operation,” he said.
The other alternative to pay for new water projects would be to use the capital improvement sales tax. Briggs said it’s up for a vote next year, so the board could start planning on what projects need to be done.
He did point out that the board has traditionally been able to pay for capital projects without the capital improvement sales tax.
Briggs said he didn’t favor one option over the other, but simply wanted to inform the board and let it decide.
Board President Kurt Voss said Washington’s rates are among the lowest in the area, but it may not be a bad idea to look at raising the rates. The board agreed to continue looking at the rates at a future meeting.