Payson water rate hike a sign of the times

Editorial

By Matt Brabb
Connection Editor
The Payson Town Council voted to raise water rates by 10 percent last week, and not without good reason. Of course, there is never a good time to raise rates, but the increase represents a boost of only $3 a month in the bill for the average Payson family.

The town has not raised rates since 2003, even though a plan has been in place to hike rates since 2006. A number of factors have come into play to delay the rate increase. Account growth has slowed, the average amount of water used per customer has declined, and long-term debt assumptions for the town are lower than were forecast in 2006.

Still, it will be important for the council to follow through with its intention to review the plan for rate hikes on a regular basis. Some residents have predicted that revenues from the rate increase will be funneled into the town’s general fund by means of loans from the water department. During the current fiscal year, the water department did in fact loan the town’s general fund $1 million, but council members have maintained that the loan was needed out of necessity because of an unprecedented recession, and that such a strategy will never be used on a regular basis.

In fact, the town may still avoid taking out the $1 million loan. According to Mayor Kenny Evans, the chance the town will need the water department loan is 50-50 at this point. He credited the decision made by the council to reduce hours worked by town employees, and the postponement of capital expenditures for the money saved that may make the loan unnecessary.

The new rate plan will raise the minimum basic service charge for 2,000 gallons a month by nearly $3. Councilor Rick Croy pointed out that setting the bar at 2,000 gallons did little to promote conservation for those who could possibly consume less, and consequently there was no incentive for customers to use fewer than 2,000 gallons a month. That reasoning is sound, and we hope that future changes to rate structures will bear it in mind.

Dan Jackson, of Econmonists.com, agreed with Croy, and said that charging by the gallon, without a minimum, is how many communities now build their rate plans. Jackson worked with representatives from the Payson Water Department to come up with a strategy to balance the water department budget.

The obvious question, one justifiably asked by Payson residents, is why now?  The Payson Water Department reportedly has some $7.5 million in the bank, and its ability to loan $1 million to the Payson general fund would lead one to believe that they are not exactly strapped for cash.

The answer would appear to be twofold. First, Payson really is dealing with an aging water delivery infrastructure. Sections of Payson are served by water mains that are as many as 60 years old. Such piping was not designed to last forever, and it is reasonable to expect that the town needs to prepare for the costs necessary to replace it.

But the town also needs additional revenue to prepare for the imminent arrival of CC Cragin water in 2015. In years past, the town anticipated that impact fees derived from issuing some 200 new residential permits a year would cover the cost of the needed Cragin infrastructure. Because development has been at a virtual standstill during the last few years, those impact fees have failed to materialize.

The sample rate plan in the proposal presented to the council calls for rate increases, though minimal, in every year for the next five to six years. These projections are based on the assumption that there is a continued scarcity of revenue from impact fees, and that the economy continues to muddle along. In effect, it assumes the worst case scenario.

Governments at all levels rarely push back potential revenue streams. If the economy improves, and residential development results in an increase in impact fees, a vigilant Payson citizenry should insist that water rates not climb. The arrival of Cragin water should ease water restrictions for the average Payson family, not jack up their water bill.