Council OKs sewer rate hike

McCOOK, Neb. -- The McCook City Council added a sewer rate increase earlier this week to recently-approved property tax and trash collection hikes. City leaders contemplated a pair of options, which essentially amounted to weighing whether to favor the largest or smallest consumers of city services, before ultimately approving an increase which favored the largest of city water users.

Utilities Director Jesse Dutcher recapped sewer rate scenarios during a review of the annual cash flow analysis for McCook's water and sewer enterprise funds earlier this month. He explained sewer usage is calculated from an average of a customer's water usage during the months of December, January and February.

"Those numbers are then used to calculate your sewer bill for the whole year," said Dutcher, adding there were some exceptions, such as car washes that are billed monthly. The sewer billing cycle begins the first of May each year.

City staff asked councilors to approve either a $1 monthly increase to the sewer base fee or a 3-percent increase to both the monthly base fee and the usage rate.

"As you can see it's less for the small households and the modern size households but it jumps pretty big for the larger, restaurants for example and hotels and stuff. Their bills go up pretty high monthly," said Dutcher. He also indicated the flat rate increase was easier on customers and more fair.

"It's easier for the customer. Yes, it's gonna cost the small user a little higher number than what it does the large users, obviously," he said, adding city staff had found the base rate increase to be the fairest approach in the past.

Mayor Mike Gonzales said small customers likely wouldn't fret over the difference between a 50-cent or $1 monthly rate increase to their budget. Mayor Gonzales is also the Executive Director of the McCook YMCA, which houses the city's only public indoor swimming pool.

City Manager Nate Schneider said smaller households would likely be affected more than larger business and commercial customers, however, the $1 flat rate increase would be easier to calculate than a percentage increase. "It's easier to calculate if it's a known factor," he said.

During the cash flow analysis, Jenny Blankenship with Public Financial Management said increasing the sewer base rate by $1 per month for both residential and commercial customers would generate almost the same amount of revenue as increasing usage and the base rate by 3-percent. She also indicated a flat rate increase would make it more difficult for users to avoid the increase by reducing their water usage.

"If I were to propose which one that I think is better, I would certainly go with the scenario where you guys are raising the base by $1 and keeping the usage where it is. The reason I say that, is because the thing that we can't control, that you as City Council members can't control, is how much usage people are gonna have. By increasing the base that money is gonna come in every single month whether they're a large user or a small user," said Blankenship.

The City Council approved sewer rate increase approved on its first of three required readings earlier this week bumps the base fee for residential and commercial customers by $1 per month. The base fee includes the first 333 cubic feet of usage and will increase from $14.279 per month to $15.279 for residential customers, as well as from $21.259 to $22.259 for commercial customers.

Usage above the base 333 cubic feet is billed at $3.299 for both residential and commercial customers and will remain the same.

City staff estimated the sewer increase to generate $40,000 in revenue from the approximately 3,500 billed customers.

Sewer customers are also charged sales tax on the service and the $1 rate increase will generate just shy of $3,000 in additional sales tax revenue for state and city coffers, based on city staff estimates.

Blankenship's analysis also recommends the city continue to increase sewer rates at the same 3-percent or $1 base rate amount annually for the next six years, which would result in just shy of $20,000 in new sales taxes collected from city residential and commercial sewer users, if carried out.

The 2016-17 sewer rate increase will likely return for second and third reading approval in October.