WATER-RATE INCREASE BRINGS QUESTIONS ABOUT RISING COSTS

The Cape Girardeau City Council will consider a proposed 5 percent rate increase in water rates next Monday. The matter had been tabled from two weeks ago. The 5 percent increase in water rates is already calculated into the city budget, which was approved by the council last June.

The council may have little choice but to pass along the increase. But the city should take a much closer look at rising water costs. The council should also stop approving budgets that depend on rate increases later in the budget year.

With voter approval, Cape Girardeau purchased the water system from Union Electric in 1992. At that time, the campaign emphasized that purchase of the water system by another private company would likely result in rates that could skyrocket out of control.

But the city has passed its share of increased costs on to consumers. There was no rate increase the first year, but rates rose 3 percent in each of the next two years. A 5 percent increase is on the table this year.

This newest rate proposal comes on the heels of a voter-approved quarter-cent sales tax to pay for $26.5 million in bonds to expand the water system.

Costs have increased rather dramatically for Alliance Water Resources, the company that manages the water system for the city. The contracted cost of Alliance's management services has increased from $1.47 million in 1992-93 to an estimated $2.12 million this year.

A review of these cost increases would, for example, look into why the number of Alliance employees has grown by one-third since 1992 -- from 24 to 32. Alliance says increased water demand of 20 percent and federal regulations have necessitated the higher costs.

That isn't to say Alliance isn't doing a good job. But much of the reason this 5 percent rate increase is needed is due to a 14 percent-plus increase in Alliance costs over last year. It only makes sense for the council -- and citizens -- to more fully understand just why these increases are needed.