CITY CONSIDERS WATER RATE INCREASE

The Cape Girardeau City Council will consider imposing a 5 percent increase in water rates during its first meeting of the year Monday.

The proposed increase, which if approved would be effective Feb. 1, is expected to produce $190,000 annually in additional revenue.

The funds generated by the rate hike have already been figured into the current budget, which took effect July 1 and runs through June 30.

Mayor Al Spradling III, although he wouldn't predicted how the council will vote on the measure, did point out that the council factored the increase into the budget approved it last summer.

"One of the issues we had to address was if we are to maintain the current level of the water department, we would have to pass a 5 percent rate increase," Spradling.

The increase would generate approximately $80,000 for the current fiscal year.

City Public Works Director Doug Leslie said the increase "is intended to keep us even for the fiscal year."

The last water rate increase came last January when the council implemented a 3 percent rate hike. Under the city charter, the council may not raise fees by more than 5 percent annually.

Leslie said water rate hikes are usually implemented in the winter when water usage is low rather than at the beginning of the fiscal year when usage is high.

According to Finance Director John Richbourg, the rate hike is necessary to offset increased operating costs.

Under the proposed rates, the average monthly residential water bill, based on 6,700 cubic feet of water, would increase 74 cents, from $14.87 to $15.61. The average monthly commercial water bill would jump $3.13, from $62.75 to $65.88.

The average annual increase would amount to $8.88 for residential customers and $37.56 for commercial users.

Spradling said residents shouldn't view the proposed increase as a double-whammy on the heels of the bond issue and sales tax measures approved by voters in November to fund water system improvements.

"The bond issue was for the expansion of the water system; it did not have anything to do with operations," Spradling said. "The water rate increase of 5 percent will purely deal with operating costs, and the costs of chemicals and labor. It has nothing to do with the capital improvements the bond issue addressed."

Under the voter-approved measures, the city plans to sell $26.5 million in bonds, to be repaid by a quarter-cent sales tax which will take effect in April. The tax is expected to raised $750,000 annually.

The funds will finance a much-needed expansion of the city's overburdened water system, city officials say.

When the ballot measures were being discussed, Leslie said the city advised voters the measures would not eliminate the need for future rate increases.

"We tried to be very clear when we presented the bond issue and quarter-cent sales tax that it would be used solely for capital improvements in the water system and that the water rate would still support the costs of operating the system," Leslie said. "We tried to keep those two issues separate and they should be separate."

Leslie said the water rates paid by users simply cover the day-to-day operation of the system.

"Water bills pay for the costs of producing water, getting it to homes and keeping crews available for the operation and maintenance of the system," Leslie said.

Operating and labor costs and the purchase chemicals and other materials used in water treatment leave little left over from revenue generation from customers to fund major system improvements, Leslie said.