Sewer and Water Rates? They're Going up Too.
Your sewer and water rates are going up in 2018 but the debate surrounding the entire issue was at times almost boiling.
In a debate which dealt with the capital needs for, mainly, the waterworks utility, Budget Committee debated and approved a 15 percent water rate increase and a six percent increase to sanitary sewer rates.
Councillor Dawn Luhning was opposed to proposed continual increases she saw as unsustainable for many. “I don't know who can afford these increases when there is no increases in wages and pensions to cover it” Councillor Luhning said.
She felt blaming the Provincial budget for the major funding problems facing water and sanitary sewer infrastructure was incorrect. “It (provincial cutbacks) is a drop in the bucket to the infrastructure we need to fix,” she stated.
The previously presented five year 2018-2022 capital budget said the waterworks utility required $134,654,432. That report stated “the only way the Utility will be able to find these capital needs is with significant rate increases.”
The sanitary sewer utility needed $31,515,715 according to the 2018-2022 capital budget.
The cutbacks from the Province total 16.5 percent when applied across both the Operating and Five Year Capital Budgets.
Councillor Scott McMann said he could support the 15 percent water rate and six percent sanitary sewer rate increase for 2018, but not in future years. “I can support the 2018 increase. I cannot support 15 percent going down the road,” he said, adding “we certainly need to get working on years two, three, four and five because we can't keep bumping that utility fee.”
A proposed water works utility financial model provided in a background report showed water rate increases of 15 percent annually in the 2019-2022 period. The model also calls for borrowing $75 million to pay for capital requirements.
The cost of repairs are budgeted at $1,783,556 or 45 percent of the waterworks utility overall distribution budget. The repairs budget has grown 348 percent since 2010, when it was $398,191.
A proposed sanitary sewer utility financial model in the same report showed rate increases of six percent annually in the 2019-2022 period.
The report accompanying the model also made the assumption of required capital funding for both utilities but did not include infrastructure funding from both the Provincial or Federal governments, which would lower borrowing and other required funds.
The report also stated the cost of water had increased by 24.2 percent from the Buffalo Pound Water Treatment Corporation (BPWTC). BPWTC is now responsible for capital upgrades at the water treatment plant, resulting in the water cost increase. The funds are needed to fund a $140 million refurbishment project at the plant.
Councillor Chris Warren asked how much money was already committed and if cuts could be made.
City Finance Director Brian Acker said the City was “limited in other sources and tax increases would be significant” to pay for the required work.
Work could be deferred but would still be done later, Acker stated.
“The projects are not going away. It's infrastructure that's worn out. We saw in the past in Moose Jaw and it's the reason why we are in such a dire financial situation now,” he said.
Councillor Don Mitchell proposed increasing water rates by 10 percent and the remaining five percent could be handled more equitably through a mill rate adjustment.
Coun Mitchell later withdrew his motion after being told by Administration the budget process was far too progressed and it would make it difficult get work tendered for this year. In last year’s budget he had argued against the 15 percent increase then, as it was a tax shift which was unfair and disproportionately impacted poorer residents.
Mayor Frasier Tolmie spoke about the challenges Council had faced in the 2016\2017 budget, with the Province cutting 22 percent impact in PST revenue and grants in lieu.
Mayor Tolmie said he supported the increase, given last year the City had seen “some very good areas of progress” tying it to the “benefits of asset management.” Going on to state he supported the rate increases.
Asset Management is delivering a predetermined service level by allocating limited funds more strategically. “It's courage under fire and not an easy decision to be made, but it needs to be made, given the challenges of this time,” he stated, adding “we may not be getting hero badges for it. But it's a decision we believe we have to make.”
In an interview, Councillor Brian Swanson said “it's not the right way to go about it. There are already people voicing concerns with water rates.”
Coun Swanson said hiking water rates 15 percent may not have the desired effect in raising funds, as Administration’s financial model predicts because people cut back on water use. “People stop watering lawns and gardens when you increase water rates. It may not help so much,” he said.
In the end, Budget Committee approved the proposed rate hikes, with Mayor Frasier Tolmie, Councillors Crystal Froese, Don Mitchell and Scott McMann all voting in favour.
Councillors Brian Swanson, Chris Warren and Dawn Luhning voted against the rate increases.
In a related budget decision Council agreed unanimously to dedicate the one percent Federal Gas Tax Fund money of $1,983,130 to the BPWTC water treatment plant upgrades and the main feeder line, presently under construction, coming from the plant to the City.
The Federal Gas Tax Fund was launched in 2005 as a means to provide reliable infrastructure funding to municipal infrastructure projects and must be allocated annually.