Mesa council approves rate increase for three utilities - East Valley Tribune: Business

Mesa council approves rate increase for three utilities

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Posted: Saturday, June 22, 2013 5:08 am | Updated: 7:31 pm, Wed Jun 26, 2013.

A recent decision by the Mesa City Council will lead to a bit of an increase on three utilities for Mesa residents beginning next month.

During a June 17 meeting, the council unanimously approved a 2-percent increase in the water, wastewater and solid waste utility rates for the 2013-14 fiscal year, with the new rates coming into effect July 31.

According to documents attached to the meeting’s agenda, the average Mesa resident will see his or her water bill increase monthly by 76 cents, the wastewater bill by 50 cents a month, and the solid waste bill by 48 cents per month. The city anticipates it will receive a $3.5 million boost in revenue during the duration of the 2013-14 fiscal year because of the increase.

This is the first time in two years the city has raised any of its utility rates — the cost for electricity and natural gas for the 5.5 square-mile downtown area and vicinity served by the city will not change — and city office of management and budget director Candace Connistrano attributed the steadiness to debt refinancing prior to the 2012-13 fiscal year, which alleviated some of the city’s expenses.

“We were happy we didn’t have to raise rates,” she said.

Connistrano said the city’s refinanced debt is not the cause of the upcoming increases. Instead, the bump in rates is rooted in a confluence of factors that, combined, will add $500,000 to the budget during the next fiscal year and $1 million a year after that. Those causes come from expense increases related to upkeep and operation of the utility services.

Water rates, for example, are influenced by the costs of chemicals used to ensure the canal or well water the city uses aligns with federal standards, infrastructure upkeep and electricity in the purifying process. Solid waste management has its own set of costs that come into play, as Connistrano said fuel prices for vehicles is a notable expense, although she added the city is working to convert its fleet to compressed natural gas that should save Mesa money in the long run.

Related to that is the transportation of the waste to a landfill — Connistrano said the city does not have its own landfill — and even the amount of waste collected affects costs.

“The higher the tonnage, the higher the cost,” she said.

A constant among every city department are employee costs like salaries and benefits, which take up a large percent of a department’s budget.

Connistrano said the increases were also tied to non-utility related expenses, including a requirement by the council to keep the reserve budget within 8 to 10 percent of the actual budget and the approved increase of the city’s enterprise fund for the first time in five years. She said the latter is sometimes used to add money to the city’s general fund, and is padded by the revenue earned from utilities.

Connistrano said the city could have taken another tactic and raised the rates by 6.8 percent, which is the same percent the water rate increased during the 2011-12 fiscal year. But the goal, she said, was to implement the increase over a period of a few years in lieu of a one-year rate hike.

“We are always trying to smooth our rates for our citizens; we’re trying to avoid a big spike,” she said.

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