Mt. Vernon Register-News

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April 18, 2014

Water rate hike revisited

MT. VERNON — The city council revisited a proposed water rate hike, now including information on a 3.3 percent increase.

“It’s clear a 3 percent increase technically isn’t adequate to meet the financial policy,” Councilman David Wood said. “A 1.8 percent increase doesn’t get us close, a 2.4 percent increase is still $100,000 from the policy and a 3 percent increase is still under.”

On Tuesday, the board met in workshop session to discuss the upcoming budget, and the budget work continued on Thursday, with additional information provided to the council on the water rate increase proposal. During Thursday’s meeting, the council requested information on how close to the fiscal policy a 2.4 percent increase would bring the city after City Manager Ron Neibert and City Finance Director Merle Hollmann provided information on no increase, a 1.8 percent increase and a 3 percent increase.

Under terms of the city’s financial policy, which was adopted last year, each fund must have an additional balance — in the case of public utilities, the additional funds are needed to alleviate cash flow problems.

Wood emphasized the public utility funds are “break even” funds — with the amount collected from residents and customers being the same as the cost to provide the service. Hollmann said the financial policy in the funds alleviated the cash flow problems between when the city had to pay its employees and vendors — Rend Lake Conservancy District for Water and Republic for trash — and when residents paid their bills.

Under the proposed 2014-15 budget, which begins on May 1, the public utilities

fund should have an ending working fund balance of $585,536 — which is above the $369,633 ending balance projected based on the revenues and expenditures.

Under a 1.8 percent increase, the working fund balance would go up to $484,484 — $101,052 less than needed for the financial policy; with a 2.4 percent increase the balance would increase to $522,734 — $62,802 less than needed; a 3 percent increase would bring the balance to $561,034 — $24,502 less than the financial policy.

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