Water/Sewer Rate Increases

We stopped by Public Works today to pick up Amy Williams’ samples of water/sewer rate increases. There have been several proposals so far. I’ll list the four top ones:

1. an across-the-board increase of 9%;
2. a proposed 9/9/12 % increases based on the three levels (tiers) of water use;
3. a proposed 9/12/12 % increases based on the three levels (tiers) of water use
4. a flat rate increase of $5 water, $7 sewer.

Williams said she would support any formula for an increase, she but liked the 9/9/12% best, she said, because it provides additional moneys that Public Works will put to use.

A Once-through of the Different Possibilities

The across-the-board option seems to have more or less dropped out of consideration because it is not progressive, and because a more progressive formula based on a 9/9/12% gradation has been brought into play.

The 9/9/12% formula (# 2 above) is the result of dissatisfaction with charging year ’round households the same percentage increase as larger commercial enterprises. First, it has been argued that different rates for residential and commercial seemed to be the common practice in the area. Commercial enterprises can easily pass through a quarter- or half-dollar to make up the difference, whereas residential consumers cannot.

Further, larger users pull more resources in staff time, as veteran city-watcher Bill Earngey has pointed out, and so cost the city more.

It only makes sense that additional cost should be shouldered by the larger user at 12%, not subsidized by the smaller user.

The 9/12/12 % formula (#3 above) penalizes the year ’round resident as opposed to the absentee owner. That’s because almost no one in residence falls into the first tier, assessed at 9%. It is mostly absentee owners who fall into the first tier.

The typical usage for resident families is, according to state figures, 6000 to 6500 gallons. That falls into the second tier. A 9/12/12% formula would therefore mean that most year ’round residents would be subsidizing absentee owners.

That seems unsatisfactory.

The flat rate increase penalizes the low user compared to the big user, as we predicted. The big hotel in Williams sample, would for example, pay $983.64 with water at a $5 dollar/1000 gallons; and sewer at $7. That is $386.49 less than the big hotel pays now.

On the other hand, the small household would pay $58.56, a bit more than the $54.88 it would pay under the current structure.

Since the big user uses more resources, a flat rate increase seems like a lopsided. regressive, way to go.

We also wonder if a $5 and $7 flat rate increase would bring in the needed revenues. It would depend on what small and medium households would bring in vis a vis large users, but we do not think it worth the effort to send Williams back to the abacus to work it out for us. It is a regressive option that has no place in Eureka Springs.

We think Williams has shown good sense in opting for the 9/9/12 formula. Our continually-deteriorating– and very old– infrastructure almost promises that the city will never have enough money to cover, but 9/9/12% looks like a good place to be. With PW Director Dwayne Allen’s five-year, and further-into- the-future, plans in the making, he will no doubt quickly use up the additional 3% that would be added by the upper 12% tier.

But First….

Before the Council can act on the above rate increases, we believe they should they repeal city ordinance 10.44.04, prohibiting rate increases of more than 3% in any one year.

We know that the Lamont Ritchie has argued on a local bulletin board that the ordinance restricts only the Finance Director, and that Council can increase rates as it pleases, The City Clerk has picked the argument up.

But the statute is clear on its face. It clearly says no increase over 3%. It does not rope Council off from the mandate:

Municipal Code 10.44.04 (G)(4), Fees and Charges, “a rate increase or decrease shall not exceed three percent (3%) in any year (Ord. No. 1894, 11-18-02).” [boldface added]

But no matter what may be argued, or who may be believed, it only makes sense to repeal– just to be safe.