Not raising water rates in 13 years is now causing a major concern about deficits in the City of Salem water department’s operation.
Finance Director Kelly Barrow told the city council during a planning session Tuesday night that the water fund balance has fallen from $2.5-million to under $1-million in four years. She notes even in years where no major repairs are needed, the department is losing $300,000 a year.
Barrow says a study done for the city found they need for a 40-percent increase to properly funded operations and rebuild reserves.
The size of the needed increase caught the city council off guard. Barrow said she would work with City Manager Rex Barbee to come up with a proposal to put some of the increase into effect this year and then have yearly water rate increases for the next four years to get to the 40-percent level. Barrow would like to see an annual cost of inflation increase maintained after that so the city doesn’t get back into its current predicament.
Barrow says fortunately they do have a half-cent public works improvement sales tax that has been able to pick up some of the costs for water system improvements.
