As the Oconee County Board of Commissioners begins its open deliberations tomorrow night on the 2012 fiscal year budget, one of the items before it is the proposed $7.1 million budget of the Utility Department and another round of water and sewer rate increases.
The Utility Department budget is up 11.3 percent from a year earlier, reflecting increased costs of operation of the county’s utility system as well as upgrades to the sewerage treatment plant and lines and maintenance projects for the water system.
The budget also reflects increased costs for debt service for the system.
To cover the increased costs, Utility Department Director Chris Thomas has asked the Oconee County Board of Commissioners to increase both water and sewage rates starting on July 1.
The water and sewer rate increases must be approved by the BOC or it must find some way to cut costs.
The challenge of the Utility Department budget represents in microcosm the challenge facing the Board generally.
Last month the commissioners reviewed budget requests from the constitutional officers of the county and the department heads and were given a rough revenue estimate by county Finance Director Jeff Benko.
Benko told the five commissioners that revenue could be as much as $2 million less than the $21 million being asked for by the officers and department heads. The Utility Department, labeled an enterprise fund, is not part of that $21 million figure.
The commissioners will have to find some way either to increase revenue through tax and fee increases or cut requests.
The commissioners are scheduled to begin the called meeting tomorrow at 7 p.m. in the courthouse. It also is scheduled to hold another budget meeting on May 23.
The water rate increase requested by Thomas would vary based on amount of water used, but he has proposed that even the minimum amount paid by water customers would go up by 6.1 percent. The minimum sewer fee would increase by 8.3 percent.
The water rate increase would mean that those who use the minimum of from 0 to 1,000 gallons of water per month would pay $17.50, rather than the current $16.50.
A household using 2,000 gallons per month would pay $22 rather than the present $20.75, or an increase of 6.0 percent.
Residential sewage rates would go from $18 for those at the base treatment level of 2,000 gallons per month to $19.50.
If approved, the rate increases would be the third in as many years for Oconee County Utility Department customers.
The Utility Department is expected to generate the income to support its operation.
It does cover salaries and other personnel costs. Salaries are not budgeted to increase in 2012 over the current 2011 fiscal year, which ends on June 30. Overtime is projected to increase, however, and insurance and retirement contributions will rise considerably.
|BOC Meeting 4/13/2011|
The largest item in the budget, however, is debt service.
To pay off bonds sold to finance utility projects, the department in 2012 will spend $3,190,723, or 44.0 percent of its budget.
The debt service budgeted for fiscal year 2012 is an increase of 6.7 percent from the $2,992,159 it will have spent in the current fiscal year, ending on June 30.
Of the debt services for next year, $890,000, or 27.9 percent, is from the Hard Labor Creek Reservoir project, a partnership of Oconee and Walton counties. If that figure were absent from the Utility department budget, the 2012 budget actually would be $6,220,500.
The current Utility Department budget is $6,387,749.
The County sold $19.5 million in revenue bonds for the Hard Labor Creek project to cover its costs for the initial phase of the $350 million project. Construction work on the reservoir is on hold because the two counties cannot afford to go forward with it until there is increased demand for the water it would produce.
The county actually will spend less on Hard Labor Creek in the 2012 proposed budget than in 2011.
This current year the county paid $924,000 against the principal but nothing in interest. In the 2012 budget, the county will not make any payment against the principal and will pay the $890,000 in interest.
The Utility Department is expecting to pay $932,000 for the water it will purchase from the Upper Oconee Basin Water Authority, in which Oconee County also is a partner. The water comes from the Bear Creek Reservoir in Jackson County.
The Utility Department expects to generate $5,825,000 from selling that water to customers in Oconee County. The current budget shows $5,100,000 in water sale revenue.
Thomas told me on Friday that he estimates that about 80 percent of the $725,000 in revenue growth from water sales will result from the rate increase, with the remainder coming from projected increases in water sales as citizens become more comfortable post-drought in using water.
The 2012 budget shows $950,000 in revenue from sewerage treatment sale, up from $800,000 this current year.
Thomas said 90 percent of that $150,000 will come from the proposed rate increase.
Oconee County sends some sewage to Athens/Clarke County for treatment, and it will pay $33,000 for that service in the new budget, up from $26,009 in the current budget. Most of that difference results from a rate increase, Thomas said.
Thomas is seeking $100,000 to do maintenance work on two of the county’s three water storage tanks, up from the $50,000 budgeted this year.
The $50,000 in the current budget is unspent at present. Thomas said the tank in Watkinsville as well as the two on Mars Hill Road all need painting and other maintenance work.
Thomas also is asking for $200,000 in funds for unspecified replacement equipment and sewer line improvements.
He also is asking for $21,000 to replace 10 computers in the department.
The BOC last year didn’t allow Thomas to increase the water rate for those using minimum amounts, and Commissioner Chuck Horton last month showed little enthusiasm for such an increase this year.
The BOC will be doing lots of such tinkering with revenue projections and proposed expenditures prior to final adoption of a budget, now scheduled for June 7.
NOTE: In an earlier version of this posting, I said the Utility Department did not pay for its space or utility costs. Utility Department Director Chris Thomas told me on 5/17/2011 that, while there is no separate line item in the budget that shows these payments to the county, the department pays the county rent for its space and for its utilities.