WATER RATES HIKED 3 PERCENT; COUNCIL BACKS OFF PROPOSED 5 PERCENT INCREASE

The Cape Girardeau City Council opted Tuesday to approve a smaller hike in water rates than initially proposed.

Acting on an amended ordinance, the council voted unanimously to raise rates by 3 percent.

The increase, which will take effect Feb. 1, will generate an estimated $114,000 in additional revenue annually. Monthly bills for residential customers will increase an average of 44 cents while commercial customers will pay an average $1.88 extra each month.

Councilman Richard Eggiman said residents were unhappy about a 5 percent rate hike originally proposed.

"I've had more people speak to me in the community about this than about all of the other things we've discussed in my three and a half years on the council," Eggiman said.

However, he agreed that some increase was needed to keep up with rising operational costs. Three percent, he said, should be sufficient to match those increases.

A 5 percent increase is factored into the water system budget for the current fiscal year, which ends June 30.

Although the lower rate hike means revenues will be less than budgeted, City Manager Michael Miller said that barring an unexpected disaster the water system will not experience any financial problems.

"It won't affect service at all," Miller said.

The rate hike as originally proposed would have generated $190,000 annually, including $80,000 for the remainder of the fiscal year. The amended rate hike will bring in about $58,000 for the rest of fiscal year 1996-97.

The difference would have allowed the system's reserve fund to get closer to the 15 percent of budget mandated under a recent change to the city charter.

The system will be fine without the expected reserve, Miller said, as long as Cape Girardeau doesn't experience any major flooding this spring.

"If we have flooding it will be a problem," Miller said.

The City Council tabled until Tuesday an ordinance proposing a 5 percent increase at its Jan. 6 meeting after some councilmen complained that they did not have sufficient information to make a decision. Five percent is the maximum amount by which rates or fees may be raised under the city charter.

After reviewing figures on water system revenues and expenditures provided by city staff, some councilmen felt that the proposed increase was more than needed.

Councilman Melvin Gately offered the amendment substituting a 3 percent rate hike. It was seconded by Eggiman.

Councilman Jack Rickard said the staff-provided information showed that the amount of water pumped has not increased dramatically over last year.

"I say we draw back and do what we can with 3 percent rather than 5 percent," Rickard said.

Eggiman said he opposed the original hike for several reasons.

"One of them is when it was set by charter that 5 percent is the maximum ... that meant we were trying to control spending within certain guidelines," Eggiman said. The council, he added, should not automatically raise rates by the maximum just because it can.

Eggiman said Alliance Water Resources, which manages the water system for the city, has done a good job. However, he said greater care needs to be taken to keep costs in line.

The city purchased the water system from Union Electric in 1992. Alliance has managed the system since the acquisition.