Get ready — utility hikes on horizon

Shawnee residents may have less jingle in their pockets in the near future because of a projected deficit the Shawnee Municipal Authority is expected to face.
According to city officials, it will be necessary to pass the loss on to residents. Commissioner Linda Peterson said the city can’t have increases in cost and not be able to cover them. The city is being hit with fuel and chemical costs, “we’re absorbing that,” she said.
Increasing fuel and chemical costs are causing the SMA fund to spend more than the city receives in revenue. In the 2008-09 budget, the city anticipates $8,413,142 in revenue, but is expected to spend $9,276,207. The overspending will leave a deficit at the end of the fiscal year.
Utility Director Jim Bierd said he is budgeting $325,000 for chemicals and $20,000 for fuel for water production in the 2008-09 budget. In the 2007-08 budget, the city had $250,000 for chemical costs and $4,375 for fuel.
Shawnee has more than $42 million in needed infrastructure improvements, including waterlines, but questions being raised are how the city will pay for needed future projects when the Shawnee Municipal Authority fund is barely covering day-to-day operational costs.
Mayor Chuck Mills said that with costs going up, the city can’t be expected to keep absorbing them. In the private sector, businesses have to increase prices to cover their costs.
“What happens in the private sector needs to happen in the public sectorm too,” Mills said. “Let’s not be afraid to operate like a business.”
Mills said the city needs to look at gradual increases, so residents aren’t hit with a 30-percent increase all at once.
Steve Nolan, city’s systems administrator, said one cause for the lack of revenue is because of low water usage for the past two years. The city has been in a drought or has experienced torrential rains during peak times for water usage, he said.
The city is bringing in less revenue, but the costs are staying the same or increasing when it comes to operating the water treatment plant, he said.
“The city can’t continue with increasing prices without adjusting the revenue to cover the costs,” Nolan said.
City Manager Jim Collard said the city is in the process of hiring a contractor to perform a rate study, because the budget is “screaming” for the need of an increase in revenue. In the 2008-09 budget, it has $10,000 budgeted for an impact fee study, and $75,000 budgeted for a master plan.
Another revenue source for the SMA fund is tap fees for new construction. The city has looked at increasing tap fees, but several home builders and developers didn’t agree with the increase. The city put the increase on hold until more information could be found.
Mills said it is seeing major growth in building homes, and needs to take advantage of the tap fees.
“I feel like we’re leaving money on the table every day,” he said.
Mills said the city can’t afford to do projects, because the city isn’t charging enough. He said the city doesn’t need to keep having studies done to tell the city there is a need for an increase.
He said it’s common sense, and the city needs to take advantage of the growth. The decline in growth on the east and west coasts will soon be felt in Shawnee, causing people to stop building, Mills said.
Mills said city staff needs to find communities similar to Shawnee in size and see what they charge. The city has looked at increasing for more than a year, but nothing has changed, he said.
“We cry and moan when we can’t fix equipment or have new construction,” he said. “We have ourselves to blame.”
Mills said staff always is coming to the commission looking at ways to “band-aid” equipment when it needs to be replaced.
“At some point, the piper is coming to be paid,” he said.
Mills said even if the city found some middle ground on the tap fees, it will see an increase in revenue.
Bierd said the tap fee increase wouldn’t solve the revenue problem, but it would help.
While the city isn’t looking at any major construction projects in the 2008-09 budget, it is budgeting $37,000 for sludge pond cleaning, $65,000 for water tower maintenance, $30,000 for replacement of return activated sludge pump, $25,000 for manhole rehab and $20,000 for pipe bursting.
Bierd said if the city has an emergency and a pipe bursts, the city will have to make a budget amendment to cover the costs.
He said the city will be glad to have $20,000 to start with, but it will not cover all the costs.
He said the $37,000 for sludge pond cleaning will be an annual amount, so the city can accumulate funding and clean the ponds every eight years as required.
The SMA fund also has $764,000 being transferred to the general fund for reimbursements for services, including accounting, city manager, engineering and other city departments doing work for SMA.
In March, Bierd made a presentation to city commissioners and said the city needs to replace equipment; increase personnel; and improve water distribution, collection and wastewater plants.
Equipment needs total about $5.6 million, transmission totals about $20 million for building a 30-inch line from Shawnee Twin Lakes to the water treatment plant, distribution totals more than $1 million and wastewater improvements total about $1.1 million with an additional $10 million for a new southside wastewater treatment plant.
———
Amanda Gire may be reached at amanda.gire@news-star.com or at 214-3934.