Salem City Manager Rex Barbee has released additional expense numbers to justify the need for a 25-percent water rate increase that goes into effect in August.
Barbee says the city commissioned their water system engineers, Curry and Associates, to do a study to determine how much of a rate change would be necessary to cover yearly expenses and ongoing upgrades to the water system. He feels the study and the current declines in the fund balance demonstrated a need for a water and sewer rate increase by as much as 40- percent to meet the average expenses incurred in the last few years.
The council eventually settled on a 25-percent increase that will show up on bills issued in August. There will then be yearly reviews each January to determine the need for additional increases.
Barbee notes this is the first water rate increase in the water and sewer rates in the last 13 years, during which time there was a steady increase in costs associated with water treatment and maintaining the system. He notes while the city had surplus funds from prior years to cover the increases in expenses, the surplus has declined to the point there are not adequate resources to cover the cost of a potential major repair or to cover large shortfalls in income over expenses. At the same time, Barbee adds water sales have dropped by $180,000 a year over the past ten years. He feels that may be attributable to a drop in population.
There has also been an increase in the cost of wastewater treatment in the 13 year period of about $100,000 a year.
Barbee has also addressed a question raised over a state financial report that shows $500,000 being transferred out of the water and sewer fund for 2020. He reports $225,000 of that amount is being assessed for the departments to cover their share of support staff salaries. The other $275,000 reflects the pass-through funds from the half-cent sales tax that is specifically to pay infrastructure costs.
Barbee’s complete reply has been placed on the home page of the City of Salem website.
