Hutto uses less than one-third of the water it pays for, according to city officials, and local residents may soon need to pay more to cover the bill. Matthew Garrett, a city-hired consultant with NewGen Solutions, told City Council members during Thursday's meeting that Hutto pays a great deal of what it should be paying for its current water consumption within its contract with Heart of Texas, the company that delivers the city's water. City Manger Odis Jones confirmed the city consumes roughly 800,000 gallons of water per day—but pays for about 3 million gallons daily. "You are paying for about 2.1 million gallons of water that you don't use," Jones said. "We are not going to be able to make it sustainable, particularly if we are going to recruit new businesses." Without raising rates on city water users to accommodate for the overages, the city's credit rating could be in jeopardy, according to the analysis presented to council. Garrett said the city should consider raising water rates on average by 15 percent, effective in June. Raising the rate by 15 percent would leave the city with just less than $5 million in its fund balance, which is used to offset excess water costs. Mayor Doug Gaul asked if it was possible to raise rates by less than 15 percent and leave less money in the fund balance. Jones said this solution could have a negative impact on the city's credit rating. "Your credit rating is your holy grail," he said. "You get downgraded in your credit rating, then when citizens do go to the ballot and vote for something, it is going to be more expensive." The city manager suggested the city alter its water contract to solve the city's water financial woes. In executive session, council decided to review Hutto's water contract that Gaul called a "hostage situation." Gaul said the council was giving the city manager the power to negotiate and determine if Hutto could purchase the water system for itself. "But if we cannot reach an agreement for the city to purchase the system; then we as the City Council must direct the city manager and the city's attorneys to bring actions necessary to reduce water rates and get the city out of this contract," Gaul said in a statement. Before the city can raise the rate, council must present rate increases twice in public hearings and readings. Hutto City Council plans to present these changes at its next meeting.