Base water rates could rise as much as 10% in Columbia to make up for pandemic shortfalls

Charles Dunlap, Columbia Daily Tribune
·6 min read
Columbia's base water rate fee would rise 10%, from $10 to $11 per month for the smallest meter size, under the proposed budget.
Columbia's base water rate fee would rise 10%, from $10 to $11 per month for the smallest meter size, under the proposed budget.

A significant focus of this week's budget discussion by the Columbia City Council was on changes in water rates.

The city is in its budget season, and the meeting Monday was just a starting point. Decisions, including on any water rate changes, will not be finalized until the council makes its final vote on the budget Sept. 19.

An across-the-board water rate increase for customers — which includes residential, commercial and the airport — is estimated to generate an additional $2.5 million in revenue. Of this amount, slightly more than half ($1.4 million) would go toward paying down debt related to bond sales.

This opens the door to an April bond sale of $20 million from those first acquired in 2018, which will pay for the upgrades to the McBaine Water Treatment Plant.

Amendments could come later in the budget process that also may affect electric rates. There currently is no proposed increase, but expenses related to power consumption and purchases may cause a change.

While voters approved water rate increases in a 2018 bond cycle, those increases did not happen as planned during the COVID-19 pandemic.

The city is now having to make up the difference.

Proposed water rate change

The base fee would rise 10%, from $10 to $11 per month for the smallest meter size, under the proposed budget. The base price is then proposed to increase by 4% each year from 2024 to 2027.

The city's water usage tiers also could see increases in the new budget. The tiered payment system, first adopted for fiscal year 2018, is focused on water conservation. There are three tiers under the system.

Tier 3 customers consume the highest percentage of water in the summer compared to the winter, but usage has generally decreased, leading to a drop in revenue for the city.

The city not following recommendations related to a cost-of-service study in 2019 is what led to the budget crunch and need for the 10% base rate increase today, said David Switzer during public comment. He is a member of the Water and Light Advisory Board, but was not speaking on its behalf.

"We need rate increases now," Switzer told the council, "and we needed them before now to dig us out of the hole that putting off the rate increases recommended by the previous cost-of-service study put us in."

The proposed rate changes have been endorsed by the Water and Light Advisory Board and the Finance Advisory and Audit Committee.

More information about the proposed changes can be found on the city website.

Read more (city budget, water rates and McBaine, electricity):

For those likely to feel a pinch because of the potential rate change, the city has a utility assistance fund on top of the CASH and HELP programs. Started in fiscal year 2021 with $300,000, there is a budget line item to add $100,000 back into the fund, which otherwise would be depleted by the end of September. A likely budget amendment of $200,000 would top the fund back up to its original level of $300,000.

Other options; public comments

Fifth Ward council member Matt Pitzer highlighted a voter-approved 8% water rate increase from the 2018 bonds that has yet to be implemented.

The main reason was the pandemic, and it's partially why the city now is having to go after a 10% increase in the budget. The 8% increase likely would not be enough to cover operational costs, said Matthew Lue, Columbia finance director.

There is the potential to use American Rescue Plan funds on some capital water projects that could lead to a less severe rate increase, Pitzer countered.

"I don't know if there is a way to look at some sort of scenarios and options," he said, adding a hope to see how an application of ARPA money to capital projects could lessen the water rate jump.

First Ward council member Pat Fowler would rather the city pursue funds from the Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law, for capital infrastructure projects.

"The extent of unmet needs in our community far exceeds the $25 million we got in ARPA funds," she said, adding she also wants to know how the new base fee was calculated, how it ties to cost of service and what percentage of that base fee relates to maintenance.

There is an issue with the airport rate change as it relates to Consolidated Public Water District No. 1, said Jim Windsor, who worked for the city's Water and Light Department for more than 30 years prior to his retirement. A good chunk of his time with the department was as a rate analyst.

The airport rate increase violates an agreement with that district, he said. He also is concerned that industrial customers could challenge the tiered usage rate increase, leading to the city having to pay back money to commercial consumers. Based on customer water usage, both residential and commercial, the rate increase is not justifiable, Windsor said.

The 2018 bond cycle had incremental rate increases people could understand and afford, said Julie Ryan of the CoMo Safe Water Coalition.

It was supposed to have "an explanation of what we as rate payers were to expect, and it didn't happen," she said. "There was no confidence, and when the utility can't explain why increases need to happen, that is a problem.

"Ten percent to account for years of negligence and failure is not fair to the rate payer."

Social service connections

Another discussion point Monday was funding for social service agency contracts. A roughly $146,000 proposed boost brings that budget item to about $1 million. It has stagnated at about $860,000 since fiscal year 2010.

If the city had maintained core budget increases of 2.5% for social service contracts since 2010, the 2023 budget allocation would be about $1.2 million, or an increase of about $338,000.

Fowler would like to see increases to social service contracts, noting the interconnections of social services with the ability for a person to pay a utility bill. There are residents who face regular late-payment fees based on how the billing cycle works for the city and how that resident is paid by their job or other sources if on a fixed income, she said.

The social services investment is a step in the right direction, said Stacy Ford, with the city's Human Services Commission, adding if the city had budgeted since 2010 based on inflation, the social services budget today would be $1.3 million.

Resident Rebecca Shaw said during public comment the budget increase for social services is grant-based and not necessarily city-directed, while urging the council to get social services funding to $1.2 million, rather than the budgeted $1 million.

"Our budget is a moral document, and we need to help people that are overwhelmed," adding the use tax funding for the police department includes civilian positions. "Why can't civilian police support also include social services."

Resident Barbara Jefferson also urged the city to use its sales and use tax revenue increases to help cover social service needs.

Charles Dunlap covers local government, community stories and other general subjects for the Tribune. You can reach him at cdunlap@columbiatribune.com or @CD_CDT on Twitter. Please consider subscribing to support vital local journalism.

This article originally appeared on Columbia Daily Tribune: Base water rates could rise up to 10% in proposed 2023 Columbia budget