BAKER — The City Council discussed a proposal Wednesday to raise the minimum charge for water by $3 a month and continued talking about ways to reverse deficit spending in the city’s general fund.
Because the meeting was called a work session, no official actions could be taken.
Public Works and Utilities Director Julie McCulloch said the council members’ predecessors decided not to charge a $12 minimum monthly charge for water, as recommended by a consultant who studied the city’s utility rates in 2010, instead setting the minimum at $9 per month.
McCulloch said the city made only a $175,000 profit from water sales in the last fiscal year, but the city’s utility fund is propping up the general fund because the latter’s surplus funds are dwindling.
She said the utility fund also uses its surplus revenue to pay off debt, make system improvements and have cash reserves for emergencies.
Mayor Harold Rideau said the city borrowed $4.7 million in federal stimulus money offered by two state agencies to install the city’s first water meters and had money left over to drill a new well on Groom Road.
Some of the loans were forgiven, and the debt is now down to $1,984,000.
A $3 per month increase in the minimum water charge would bring in $216,000 annually, he said.
The consultant also recommended an automatic annual increase tied to the Consumer Price Index to keep pace with inflation, and McCulloch again called on the council to consider the idea.
Council President Joyce Burges asked McCulloch to speak with the consultant to see if another rate study is needed.
The most dire scenario facing the city is running out of surplus general fund money to continue spending at or near the current levels for police, firefighters, public works employees and other workers.
Rideau said the city is “on the edge of a cliff” because sales tax revenues are not keeping pace with increasing personnel costs.
The city has about a year to solve the problem.
“If we can’t resolve this, I can take care of this with my budget,” Rideau said, referring to deep spending cuts.
The Legislative Audit Advisory Council recently directed city officials to say how they expect to resolve the problem of a $324,299 deficit in the half-cent sales tax fund for police and fire salaries.
Deficit spending also is occurring in other areas funded by regular sales taxes.
Police Chief Mike Knaps said salary costs in his department have risen about 2 percent annually for the 12 years the half-cent tax has been collected, but the enormous increase in police and firefighter personnel costs have been in retirement contributions, insurance and other benefits.
Fire Chief Danny Edwards said the city would not have the qualified police officers and firefighters it has today without the special tax to supplement salaries.