A 10 percent hike in water and sewer rates by the City of Aiken this year could be hard for customers to stomach, especially with it being the third rate increase in the past four years. The fiscal realities of the City’s utility fund, however, show that such an increase is justifiable, especially with upgrades and repairs to water and sewer infrastructure being so crucial.
It’s obvious that raising water rates won’t foster much goodwill among some residents, especially when city elections roll around. But City Council should put future needs of our city at the forefront of their decision-making.
The City is likely to face an approximate $700,000 shortfall between its actual revenue and projected revenue by the end of the fiscal year, which will be June 30. The revenue gap, according to City officials, is the result of higher than normal rainfall last fiscal year that considerably brought water usage down. Essentially, with heavier rainfall, it lessens the need to water lawns, irrigate crops, and so forth. Consequently, the City makes less revenue from selling water to residents.
That’s the short-term issue.
The long-term issue is that the City’s water and sewer rates remain among the lowest in the state. While residents shouldn’t have their wallets gouged, providing water and sewer services is a necessity the City must effectively and efficiently provide.
The rate increase in 2012 already has started to pay off for Aiken’s aging water system. The 8 percent jump in rates two years ago helped employ new crewmembers to repair the growing amount of water leaks as well as replace deteriorating services and to supply the equipment to do that work. With each service replaced, fewer leaks should be the result, saving residents some aggravation and saving the City some money over time.
The sense of urgency to increase rates, however, wouldn’t necessarily have been needed if the City had wisely accounted for inflation during the budget process in years past. Council did raise rates two years ago with the hopes of keeping inflation in check, but in previous years, that wasn’t the case, according to City Councilman Reggie Ebner, who has pushed staff to account for inflation in order to get the most accurate budget outlook.
While customers may see a roughly 30 percent increase in rates in four years, with the largest hike coming in at 11.3 percent in 2010, the state average for water and sewer rates still is currently 52 percent higher than in Aiken. Only Myrtle Beach has a lower rate.
And lower rates, as well as low taxes in general, are undoubtedly a selling point for the City, especially with aging baby boomers looking for a place to retire.
But increasing these particular rates should result in a healthier and more manageable utility fund that can mitigate the need for the City to borrow from its general fund, which is currently the case.
Ideally, the water and sewer fund would be self-sufficient – with the City charging the most sensible rate to cover utility costs. Most any financial analyst would say those revenues have to match or exceed costs to have a healthy system. That benchmark is being missed by the City.
With projects such as the Silver Bluff water treatment plant, which carries a $4 million price tag, and the need to replace aging meters as well as keep a healthy reserve fund, Council should agree to come to the practical, though difficult, decision to increase rates.