Gunnison meeting planned to discuss water shortfall and rates
GUNNISON—A shortfall in water revenues since Gunnison City raised rates in 2014 may mean the city will have to raise the rates again.
“After reviewing the first year of usage and revenues, it has come to our attention we were short of our expected revenue and will need to look at adjusting our rates,” Gunnison City Recorder Janell Braithwaite told the city council at a recent meeting. “This doesn’t mean it was figured incorrectly; there are several circumstances that can come into play, and have, that make the difference in the expected revenues. ”
The city council has scheduled a public hearing about the rate increase for Wednesday, March 22 at 7 p.m.
“We want to make sure the public is involved in this,” said Gunnison City Councilman Blake Donaldson, the council member who oversaw the water project, which involved rebuilding the entire city system, including a new well, water tank, treatment plant and piping citywide.
“We’ve done a lot of number crunching, and we hope to have a rate schedule in place by the public meeting so the people can get an idea of the situation,” Donaldson said.
Donaldson explained that when Sunrise Engineering was making preparations to build the city’s new water infrastructure, the company calculated rates that it believed would allow the city to cover projected loan payments.
After a year, the new rates weren’t bringing in what the city needed to cover operational expenses of the water system and bond payments, and still enable the city to transfer money from the water fund to the general fund, as it has for decades, to help with the costs of general government.
“Like most little cities, our city has done that, too, (transferred money from the water utility to the general fund) since it’s the only real revenue we’ve got,” Donaldson said.
Donaldson said that in 2014, when the city council was raising water rates to cover loans on the water system rebuild, Gary Keddington, the city’s accountant, questioned whether the proposed rate increase, which effectively doubled the water rates, would be enough.
But Donaldson said because the council was already so reluctant to approve such a substantial, but ultimately necessary, rate increase, it went with lower figures hoping the revenue would be enough.
“We probably should have dug deeper at that time to confirm that it was enough,” Donaldson said. “We were sick about the rate increase as it was anyway, so we went ahead with the lower figure.”
On July 1, 2014, the city council raised the base water rate for connections within city limits from $18 for up to 7,000 gallons to $33 for up to 4,000 gallons. Base rates for water connections outside city limits went up from $27 for up to 7,000 gallons to $42 for up to 4,000 gallons.
Although Donaldson said the city won’t have new proposed increase numbers until the public hearing, the size of the increase won’t be anything close the 2014 hike.
“We really want to make sure the older, fixed income households that don’t use a lot of water are not hit hard by this,” Donaldson said. “That’s probably our number one goal. These people can’t afford this, and it’s a shame we’ve had to raise it as much as we have already.”
The 2014 rate increase was necessary because the city water project was necessary, Donaldson explained. Moreover, federal and state grants and loans take into account local effort. At the time the water system rebuild was being contemplated, city water rates were too low to enable the city to qualify for grants or loans for the project.
“When we first started, our rates were $12 for 10,000 gallons, but the (state) water bureau told us you’re crazy if you think you’ll qualify for funding on the water project with that little revenue,” Donaldson said.
He said he hopes for public understanding at the upcoming hearing. “I would think that (citizens) would need to understand that a project (the city water project) of this magnitude is kind of an experiment,” Donaldson said. “We relied on our professionals and estimated our usage pretty good. I think people tightened up a little bit in usage since then. Here now we sit with a shortfall and the time has come when we need to reanalyze this thing and make sure we can keep our city going.”
He added, “We would hope the public comes out to weigh in on this. We welcome them very much.”