By Alex Bridges
FRONT ROYAL - Rates for water, sewer and trash pickup in town likely could increase this summer.
Town Manager Steven Burke presented his proposed fiscal 2014 budget to council members at a work session Monday. The proposed financial plan calls for a 2.2 percent increase in spending from the current budget of $37.54 million to $38.37 million. The financial plan calls for reduced spending by the town administration from the current fiscal period. However, spending in the town's enterprise funds for water, sewer and solid waste increases under the proposed budget.
Water rates would increase 23.5 percent under Burke's proposal. Operations and maintenance costs and increased capital expenses, along with lower water use, spur the need to raise rates, according to town officials.
Under the proposed rates, residents would see their combined monthly bills for water, sewer and garbage pickup increase from the current $32.64 to $38.78 - a difference of $6.14, according to Burke. Customers would pay an extra $73 per year for all three services under the proposed rates, Burke said.
A family that uses up to 7,000 gallons of water would pay an extra $18.40 per month or an additional $221 per year for all three services, according to Burke.
Finance Director Kim Gilkey-Breeden reminded council the town last year did not raise rates as recommended by a study of the water and sewer system. The cost to operate and maintain the water and sewer service has increased some. But the town may likely need to borrow money, possibly in the form of a bond, to fund additional upgrades to the water treatment system as required by federal regulations.
The consultant that performed a study on the town's water system projected necessary increases in the rates of 8.5 percent each year for several years. Sewer rates would need to increase by 30 percent each year, Gilkey-Breeded recalled.
However, consumers began to use less water when the town increased rates in 2012, she said. The utility faces a struggle to meet the projected revenue amount for the year without a rate increase and less water use, Gilkey-Breeden advised. The situation spurred the director to calculate a rate increase of 23.5 percent.
Councilman Bret Hrbek asked whether the town plans to impose another rate increase in future years. Burke said the town could increase rates another 8.5 percent next year. Hrbek asked if the town could average out the two increases rather than impose such a high levy the first year. The town needs to see how much water the future Dominion power plant uses, Burke said. A study projected that the plant would use a certain amount of water and the town used that data to calculate the rate increase.
Sewer rates would increase 20 percent - a necessary amount to cover the costs of required upgrades to the wastewater treatment plant.
Burke has proposed the town increase monthly residential trash pickup rates to $1 per 32-gallon bags and $1.75 per 96-gallon bag. The proposed budget for solid waste calls for less spending, Burke said. But less revenue from garbage collection has prompted the rate increases.
When someone moves out of a residence, the town does not bill the person for the last month at the address, Gilkey-Breeden said. This contributes to the declining revenue for trash pickup. The town could have put the bulk of the rate increase on commercial customers. But doing so could have pushed away commercial customers and the town would lose approximately $75,000 in annual revenue produced by the users of the municipal Dumpsters, the director said.
"We can't cut this budget $75,000 for 23 customers," Gilkey-Breeden said.
The proposed budget for the water fund includes $150,000 spent over several years to paint the fairground storage tank; $100,000 over several years on repairs to the treatment plant reservoir; $30,000 on the automatic meter reading pilot study; and shared expense with the sewer fund on a backhoe and pump.
The budget calls for the town spending $200,000 to buy nutrient credits for wastewater treatment until the plant upgrades come on line.
Even with the increase in trash pickup fees the town can expect to see spending by the solid waste fund decrease by 5.6 percent.
Burke's budget includes a 4-percent salary increase to employees, though that amount serves to offset the required payment by staff into the Virginia Retirement System. The budget calls for no adjustment to the health insurance rates. The budget includes funding to replace a vehicle for the police department and reclassification for two information technology department positions.
The budget does not include funding for initiatives such as a donation to the Front Royal Volunteer Fire and Rescue Department, paperless council agendas through the purchase of iPads, adjustments to police department salaries, an additional auto mechanic in fleet maintenance or cost-of-living increases, merit raises or one-time bonuses.
Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or email@example.com