Akron council will consider water, sewer rate hikes in budget Proposal does not include tax increase
DENA REEDY Review Staff
, Staff Writer
The Akron Borough Council could have some tough decisions to make as it works through the 2014 budget process and that may include water and sewer rate increases for its residents.
The council was presented with the preliminary general fund budget and the water and sewer budgets at a committee meeting recently.
The proposed 2014 general fund is balanced at $1,520,202 and does not include a tax increase
Finance Committee Chairman Terry Reber said as things stand now, the borough is in "pretty good shape" and a tax increase is not needed.
However, the good news did not continue when he presented the 2014 water and sewer fund budgets.
The water fund budget is balanced at $433,125, but there is no reserve. The sewer fund budget is also balanced at $542,425, but that comes at a cost of taking $72,452 from its reserve to balance it.
"The water reserve historically runs very close to the vest, it’s really a struggle, (you) don’t seem to get big reserves built up," he said.
Regarding the sewer budget, Reber said the biggest expenses revolve around the Ephrata treatment plant.
"The first line item that (you) need to look at is Ephrata treatment costs and you will see that they went up from $212,000 to $250,000," Reber said. "That is a correct number, that is not a guesstimate."
Reber said the costs the borough pays to Ephrata are beyond their control.
"Long story short, we are paying $31,463 more to Ephrata in costs then we were paying last year," he said.
Reber said when the sewer budget was put together for 2013, it was assumed that they would need to take $50,000 from the sewer reserves to balance this year’s budget.
"That was a decision council made a year ago when we thought we could either raise the rates or take the $50,000 (from the reserves) to balance the budget," Reber said. "However, it does not look like we will need $50,000 to balance the budget. I think we are projecting half of that. Probably closer to $25,000."
"So the $72,000 that we are showing for next year (2014), it’s probably on the high side, probably," he said. "But I can’t sit here and guarantee it."
Reber did say the reserves in the sewer fund, as compared to the water fund, are well funded. If the council did approve the transfer (for 2014), there would be $207,000 left in reserve. He calculated even further and said at the end of 2015, there would be $190,000 left in the reserve.
"If you don’t eventually raise your rates," he said.
Reber said a rate increase is definitely due. He said the last rate increase was in February of 2003. In fact, the council actually decreased sewer rates in February 2010 by 50 cents.
"Effectively (rates are) at same price that sewer was in February of 2006," he said.
The current rate is $7 per 1,000 gallons.
"Here’s what you get, for every 25 cents you raise your rates, you get $17,500 in income," he said. "However, the first year you raise your rates, you only get it for three quarters of the year because you only start the second quarter of the year. So 25 cents in 2014 will be $13,125. Raise it $1 and you will see $52,000. The year after, it would be the $70,000 when you have the four quarters going."
As for another option, Reber doesn’t think so.
"(I) can’t find any meat in the sewer budget to cut any expenses," he said. "The big expenses are Ephrata’s by far."
Council also expressed concern about the water reserve, which reflects a zero balance for 2014 and a negative balance for 2015.
"We cannot operate at a deficient," they said. "We have to do something with water."
Water rates are $5.95 per 1,000. That last water rate increase was in 2012 for 75 cents.
When asked what he recommended, Reber said a rate hike.
Reber said to make up the sewer deficit in 2013, rates would have to go up approximately $1.25, which is a 17 percent increase.
He suggested the council could do half of what it needed in water and half of what is needed in sewer, which would be 75 cents in water and 75 cents in sewer and "see where it takes you."
That would mean for a customer using about 1,200 gallons of water a typical bill would increase about $18 a quarter or $72 a year. For next year, based on three quarters a bill would increase about $54, he said.
"That’s the other thing, you raise your rates, you might not get exactly what you are expecting because people start tightening up their systems, they turn off their hoses, fix their leaky pipes," he said.
The council instructed Reber to prepare two budget proposals: One with rate increases of 75 cents and one with rate increases of $1.25.
The council agreed it needs to know what the budget will look like for 2014 and 2015 with both increases.
As for the general fund, the council agreed to leave it the way it was presented.
One issue addressed was rent from the space in the municipal building, which will be vacated at the end of this month.
The borough receives $1,050 a month in rent, Reber said. Next year, he budgeted nine months rent or $9,950, and said he hoped it would be rented again by April.
He said the council has two options, rent it again or take it off market. If they take it off the market, they will lose $12,600 in revenue.
"It’s something you might want to talk about tonight,’ he said.
The council agreed they wanted to try and rent the space and keep the income listed in the budget.
Under expenditures, Reber said the crossing guards are expected to get a raise in September. He said he spoke with (chief) Tom Zell and they think the number listed in the budget will work.
He said the new rate for the SRO (Student Resource Officer) program is $7,518. "It does go up every year, and as long as you are staying in that program, that is where you are at," he said.
Regarding the fire company, "we have fulfilled our $50,000 obligation toward the purchase of their fire truck," he said.
The council decided to take a year off and not put away any money toward the fire company’s next purchase.
Under snow removal, Reber said the same amount as previous years has been budgeted, but "all it takes is a blizzard or two and it’s all spent."
The council agreed the general budget "looks good."
It will discuss the budget again at the next committee meeting.
More BUDGET, page A7