Higher rates to make up for projected billing revenue shortfall
Rollingwood City Council voted to increase city water and wastewater rates by 10 percent across the board at its regular meeting July 30. The rate change will be reflected during the next billing cycle, which begins Aug. 22.
Council discussed raising the rates an additional 10 percent, or 20 percent total, but decided to discuss the matter further before making such a drastic increase.
The city's water rates will still operate on the tiered scale adopted May 16, 2012, which charges higher water rates for those who use more water.
The increase changes the rates for residential and commercial customers alike. Residential rates are increasing from $15.24 for the first 2,000 gallons of water to $16.76. Similarly the next residential tier would increase from $4.50 for every 1,000 gallons used after the initial 2,000 gallons to $4.95.
Rollingwood Mayor Barry Bone pushed for a quick adoption of some kind of rate increase because of a shortfall in projected water revenue for the city.
"Our projected revenue is down," he said. "We have had some success in lowering water usage [because of drought conditions], but that lowers our revenue."
Bone said he projects the city will lose about $200,000 in water revenue. The city planned for $800,000 in water sales for fiscal year 2013–14.
"I'm all for conserving water, but from a financial management point of view, we need to operate our city in a solvent manner," Bone said. "As [long as] I have been here often we are losing money [from the water fund]. A lot of cities make money with their water, and we are losing money. I know nobody likes to do something in a hurry. My concern is that we are going in a negative direction, and it is affecting our next fiscal year."
Alderman Sara Hutson pointed out that while the city may be down $200,000 in projected water revenue, the water expenses for the city are also lower than expected.
"We are lower than we budgeted by $53,000 [in water expenses]," she said. "So there is more of a difference in budgeted revenue than the actual [projected loss for the city]."
About 7 percent of the 10 percent increase will keep the city rates equal to city of Austin water rate changes. Grady Reed, Rollingwood's utility rate consultant, said about half of the city's water budget is used to purchase water from Austin.
"With the city of Austin raising their rates 14 percent, we have to raise rates by 7 percent just to keep pace," he said.
Reed recommended a one-time large increase in rates to halt the city's loss in water revenue and then continuing with cost-of-living increases afterward.
"The city has been transferring money from the wastewater fund into the water fund, but [the wastewater funds] is losing money, too," he said. "You can't continue to do that."
