Big increase to water rate no easy sell to City Council
WILLMAR -- Willmar City Council members say they want questions answered about a water rate increase of 9 to 10 percent a year over two years being proposed by the Willmar Municipal Utilities.
Council members would like to know why the utility did not enact smaller annual increases rat-her than wait two years before enacting a larger increase and they would like to know what the utility is doing to control costs.
Finance Committee members asked the same questions when they met with Utility General Manager Bruce Gomm on Dec. 13. He asked the council to amend current water rates and set a public hearing to take comments about the increase, said Councilman Denis Anderson, who is the Finance Committee chairman.
Gomm told the committee that the increase is necessary to avoid a deficit of 12 percent to 16 percent in Water Division budgets for 2011 and 2012. He said the utility cut expenditures during the last two years to delay the increase, and he said several deferred maintenance items now need attention.
The council voted Monday night to hold the hearing Jan. 10. Councilman Doug Reese asked why the utility is projecting significant revenue losses for the next two years. Anderson said the estimates are based on current rates.
"They're saying that without those, they will lose money because their expenses are going up,'' Anderson said.
Reese said the increase is significant and he wondered if smaller increases over time would be in the city's best interest. He said smaller increases will not hurt as terribly as a large increase and may minimize increases overall later on.
"Those are very legitimate questions and I think we should pose those at the public hearing,'' Anderson said.
Councilman Ron Christianson said constituents asked him about the increases and he asked if Jennie-O Turkey Store was using less water, but the utility expects the same amount of revenue.
City Attorney Rich Ronning said a Jennie-O representative told the Utilities Commission during its water rate hearing on Dec. 13 that the company's water usage is down about 20 percent.
"They are by far the biggest user of water in the city of Willmar,'' Ronning said. "They expressed the same concern that council member Reese expressed, that it would be much easier for them to have an increase every year rather than get hit with something like this and particularly since they do their budgeting in June. They weren't planning on this kind of an increase for 2011.''
Councilman Steve Ahmann asked what steps have been taken by the utility to curtail costs.
Councilman Jim Dokken said it's obvious that a structural change is needed at the Municipal Utilities. Dokken referred to remarks given by Peter Hutchinson, president of the Bush Foundation of St. Paul, to a group in Willmar that Minnesota needs to revamp government to increase productivity and decrease spending.
"The dollars are not going to be available. The only logical step is for the (utilities) to do things differently,'' said Dokken.
Mayor Les Heitke said the utility has had to deal with federal and state mandates. One mandate cited by Gomm was a conservation rate required by the Minnesota Department of Natural Resources that's intended to reduce summer water consumption.
In other action Monday, the council approved a motion offered by Ahmann and seconded by Dokken to have the Finance Committee discuss a timeframe for ending the local option sales tax.
Heitke asked Ahmann, "What's behind that?''
"Nothing,'' Ahmann replied. "I think it's time we should look at it, review it and see where we're going to be and get an estimated timeframe to let the public know where we're going with it and when we're planning on ending that.''
The one-half-percent tax was endorsed by Willmar voters in 2004, was approved by the Minnesota Legislature in 2005 and went into effect in 2006 to fund four projects. The tax was allowed for seven years and allows the city to issue of up to $8 million in bonded indebtedness. The city did not issue bonds for the projects, but paid cash instead.
In other business, the council:
- Approved an agreement with Lutheran Social Service to use the Community Center for the senior dining program.
- Concurred with a determination by the Kandiyohi County Board that forfeited property at 206 Bernard St. S.E. has a value of $9,000.
- Approved a $22,415 contract with Dovre Township for fire protection services from the Willmar Fire Department.
- Approved an agreement with Short Elliot Hendrickson for miscellaneous traffic signal consulting services at a cost not to exceed $5,000.