LATHROP — The Lathrop Council Tuesday night delayed voting on the proposed five-year sewer and water rates, at least, for now.
After a roughly two-hour discussion, the council unanimously agreed to continue the public hearing to the second regular council meeting in February to give staff time to come up with answers to the questions and concerns brought up by the council members and the citizens who voiced their objections to the suggested increases in their monthly bills. Under the proposal, residents could see their monthly utility bills double in five years.
Postponing the vote, however, will not solve the difficult fiscal dilemma the city is currently facing. If the proposed rate increases are not put in place, the city would likely see its general fund go in the red. The city is already currently using some of its general fund to keep water and wastewater costs down for its citizens.
But residents, like former councilman Steve Dresser and Craig Weiss who voiced their objections to the proposed rate hikes, said they were concerned about the impacts these higher monthly rates would have on Lathropians who are already having a hard time making ends meet in these difficult economic times, especially those who are on fixed incomes or families who have lost their homes in the foreclosure mess that has hit the city particularly hard.
The council members agreed. Council member Christopher Mateo, for one, pointed out that the proposed boosts in monthly utility bills show a 100 percent increase in five years. And while that will be happening, “none of you will double your paychecks in five years,” he said.
“I’m really torn between (voting) for and against” the fee increases, he added, echoing the general feeling among the council members.
The other side of the coin, though, is the real specter of draining the city’s general fund if it continues to subsidize the rate increases. For the 2009 fiscal year alone, the proposed subsidy stands at $1 million or a total of $14,600,000 in five years. Spread out, the suggested subsidies are: $1,950,000 in 2010; $1,550,000 in 2011; $4,750,000 in 2012; and $5,350,000 in 2013.
Finance Director Terri Vigna said that the general fund as of the end of Aug. 2009 was $8.2 million, but that was the estimate when the budget was adopted in June 2008.
“That was the optimistic view then,” she said.
With interest rates down and with the downward economic spiral that happened since June, the estimated $8.2 million general fund is now down to just about $7.3 million, Vigna said.
But Dresser argued, “money in the general fund comes from sales tax, and sales tax comes from the taxpayers already.”
All that the taxpayers are saying, he said, is for the council to simply look at the hike proposals and “maybe use some of that (sales tax) money to soften the blow” of the rate increases on the residents’ pocketbooks.
In response to council’s query about any existing programs that could soften the financial blow to the residents, Vigna explained that the city has a payment assistance plan which piggybacks on a program already offered by PG&E. That program gives as much as 20 percent discount in water bills to those who qualify, and that could be renewed every year, she said.
The council members unanimously agreed to continue the public hearing and discussion to Feb. 17 and, at the same time, gave instructions to staff to further explore other ways to lower the rate increases for the residents.
Sewer rates have to be increased to cover costs connected with state- and federal-mandated requirements such as plant upgrades. The latest upgrades, for example, at the Manteca wastewater treatment plant where Lathrop historically has a 14.7 percent stake in treatment capacity, cost Lathrop sewer customers $4.3 million.
Increases in water rates are needed to cover expenses also connected to mandated requirements such as reducing arsenic contents in well-water supplies which requires construction of expensive treatment plants.
For the government to come up with these expensive requirements is “unfair; it disgusts me. If it were up to me, don’t build the treatment plants,” said Mayor Kristy Sayles.
“It’s a difficult decision. But in light of the $14 million subsidy in five years, I don’t know that we have a choice,” she said.
Without the necessary increases in water and sewer bills, she said, the city faces the “potential of bankrupting the general fund.
“We have the fiduciary duty to make sure that doesn’t happen,” Sayles said.