POSTED ON MAY 14, 2008:
Leave It to the Spearcarriers
No good news, no mention of bad news by mayor in delivery of new budget
"It's the classic case of pay me now, or pay me a lot more later," said Rick Hudson, vice chairman of the Tulsa Metropolitan Utility Authority about the utility rate increases included in Mayor Kathy Taylor's recent budget proposal.
He, along with a cadre of other reps from the TMUA and Tulsa Utility Board, issued a written statement last week, a few days after Taylor pitched her fiscal year 2008-09 budget plan to the City Council.
Councilors weren't necessarily critical of the proposed rate increases per se--just the fact that the Mayor made no mention of them in her public presentation.
Council Chairman John Eagleton later said, "You'd think she would have at least mentioned" the proposed rate hikes, since they were, in his view, "the most contentious part of the budget."
The City of Tulsa provides water, wastewater, stormwater and refuse services.
There is no increase proposed for refuse services, but 5 percent increases for water and sewage rates were proposed and a 10 percent increase for stormwater rates, which would increase the bill for a single family home by $2.44 a month, on average.
Along with puzzlement about the Mayor neglecting to mention that not-so-insignificant detail, councilors also expressed initial concern that the increase might conflict with Councilor Bill Martinson's plan for street rehabilitation, since utility rates have been discussed as a possible way to fund repairs.
As the City Council was abuzz with comments and questions, the city's utility gurus issued a statement defending the requested increases.
"Next year's rate increases are vital to support the critical maintenance needs and capital improvements, without even addressing other high-priority issues," said TMUA Chairman Jack Neely.
Those maintenance needs and capital improvements include replacing or adding about 16-18 miles of aging water lines per year, at $17 per inch of pipe diameter (or $170 per foot for a 10-inch pipe), coinciding with street repairs.
Also, the 30-year-old high-service pumps at the A.B. Jewell water treatment plant need to be replaced, as well as two 40-year-old clarifiers.
Also, according the utility gurus' statement, Mohawk WTP, "originally built in the 1920s but completely rebuilt 10 years ago, requires ongoing maintenance and replacement of smaller equipment to protect the city's investment."
Also, the Quality Assurance Lab that services the water system is in need of "critical upgrades" to meet the EPA's safety standards, since much of the equipment is "obsolete and inefficient."
"Without the rate adjustments, we will struggle to maintain the systems and will find ourselves with water and sewer systems in the future that are in the same condition as our streets today. While unpleasant, we must reinvest in Tulsa's aging infrastructure, and these rate adjustments are essential so we don't fall further behind," said Neely.
Wastewater fees increased in 1998, 2000, 2004, 2006 and 2007 by various amounts, but even with those hikes, fees still haven't been high enough to cover the cost of services.
Sewage and stormwater services are still subsidized by third-penny sales tax revenue and general obligation bonds.
"Utility rates have been kept artificially low for a long time and, eventually, they'll have to be raised to a comparable rate," Councilor Rick Westcott told UTW when asked for his take on the rate hikes.
Martinson told UTW that Wichita, Kan. is the only city in the region he's aware of where the utility fees don't cover the costs of services. The costs are offset with higher property taxes for Wichita residents.
Neely, Hudson and the others said, even with the proposed increases, the average bill for a single family of four for water and sewer services will remain below five of seven peer cities and, in the Tulsa metro area, Tulsa's combined water and sewer bill for average usage is below six of seven comparable suburban communities.
"The fact is that our system must be adequately maintained and future growth must be provided for," said Hudson.
"We are barely able to meet the maintenance needs now with our income, based on existing rates," he continued.
"If we fail to be fiscally responsible to adequately fund the maintenance and future growth requirements, we will find ourselves in the same situation very soon as we now are in with our streets.
"Once our systems deteriorate past a certain point, they can no longer economically be maintained and they must be completely rebuilt and expensive equipment must be replaced at a cost that is far greater than the small rate increases that are required now," Hudson added.
With all of the above considerations in mind, Martinson and Westcott both said they plan to vote to approve the Mayor's budget proposal.
The Council is required to approve a budget before July 1, the start of the new fiscal year.
Regarding concerns about it conflicting with his street plan, Martinson said, "It's a really legitimate question, but I don't want people jumping to conclusions that aren't right, and if it would have been contrary to what we needed to do with the streets, I'd be the first one out there screaming and hollering.
"I can't speak for the other guys but based on the research I've done relative to the streets, the proposed rate increase is in line with what I would have expected," he added.
"Up to this point, we've been using sales tax and property tax revenues to help subsidize our sewer service, and I think we need to get our rates adjusted on those services to cover the cost of service, and that will free up money in the general revenue fund that we can apply to fix the streets," Martinson also said.
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