By Keene Winters
Mayor Robert Mielke’s proposed budget for 2020 has been released, and it requests an increase in borrowing from $107 million to $223 million.
Four years ago, the city’s outstanding debt was $56 million. A brief history of the city’s debt starting with the last term of Mayor James Tipple follows:
The prime driver of the increase is the issuance of $121 million in revenue bonds for the replacement of the city’s wastewater treatment facility and water treatment plant. This will increase debt for the utility from $23.6 million at the end of 2019 to $143.4 million at the end of 2020. Residents will see the increased costs on their water bills rather than in their property taxes.
We should all take note that the city’s approved debt budget has not exactly been the last word during the past four years. On average, the budgets have underestimated the actual debt issued by 11.5% per year.
The utilities do not have a lot of room in their budgets for extra costs. The city budget document projects that actual revenue for the water utility will come in at $5.96 million for 2019 and the wastewater utility will come in at $5.46 million. That is $11.42 million together. The cost to retire $121 million in new debt over 20 years will be something like $8 million per year. That will certainly require a steep increase in water and sewer rates to cover it.
At this point, very little information has been made public about the impact of this debt issue. A good guess is that the average household could see an increase of $300 or more in their annual bill starting in 2021.
That $300 will mean different things to different people. For a family living in a $400,000 home and paying $10,000+ for property taxes, that $300 increase in the water bill will feel the like as a 3% increase in taxes. However, for a family of modest means living in a $120,000 home and paying around $3,000 in property taxes, that $300 hike will feel like a 10% increase. The council should not pass a debt issuance of this magnitude without some high-profile public information meetings dedicated to explaining the need for these projects and how the costs will impact rate payers.
Clearly, it is bad planning to be replacing your wastewater treatment plant and your water treatment facility in the same year, and it will be costly. So, get those leaky toilets fixed now and hold on to your wallets for 2021.
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