No water, sewer rate increases, for now

Despite a decrease in water usage, water and sewer rates will not be increased, at least for next year.

But, City Manager Kurt Fritsch warned that "we can't deceive ourselves that (rate increases) will always be at zero percent," due to inflation, what happens this year with usage and projected increases built into the financial model for the water and sewer funds.

The McCook City Council agreed Monday night to not raise rates for water and sewer at the regular city council meeting, after reviewing with Utility Director Jesse Dutcher the financial model provided by Public Financial Management. PFM reviews costs and expenses of both funds on a yearly basis and recommends to city staff what is needed to keep the funds sustainable.

Due to the decrease in water usage, the re-estimated revenues for 2009 are down about $200,000, or 10 percent compared to last year, according to PFM. Actual year to date consumption shows usage is down by 15 percent.

The financial company found that a 3 percent increase in water rates would slightly decrease future rate increases in the "out" years and keep the cash balance fairly high.

In the past, cash reserves were held at high levels because of on-going capital projects along with the uncertainty of what the cost of operations would be at the water treatment plant. However, now that there is some history of the water treatment plant, that began operation in 2007, city staff feels they have a better picture as what to expect for expenses and can allow the cash reserves to be lowered a bit.

A 3 percent increase in sewer rates would maintain a more adequate cash flow in the future and sustain itself on smaller rate increases in years to come.

But as with water, city staff again felt that sidestepping an increase this year was feasible, with no adverse effects to the sewer fund, as long as it is understood that at some point, rates will have to increase to keep ahead of inflation.