The City of San Marcos Municipal Building. Photo by Andy Sevilla.
By ANDY SEVILLA
Accepting city staff arguments that San Marcos no can longer postpone utility rate increases, city councilmembers grudgingly agreed last week that city residents will have to pay higher bills.
New utility rates will be factored into the Fiscal Year (FY) 2011 budget, which will go into effect on Oct. 2. Though the city council is planning to keep the property tax rate at 53.02 cents per $100 of taxable value, consumer rates for the city’s electric, water and disposal services will increase at least $3.50 per month on average between them.
The city is planning annual electric rate increases until at least 2016. With a 1.4 percent increase in the next budget, electric fund revenues are projected at $51,386,818, with expenditures estimated to come in at $51,314,445. The rate increase will amount to a jump of $1.85 on the average residential bill.
City officials said an electric fund balance of $4 million would disappear in 2014 without a rate increase. With the rate increases, the fund balance would grow to about $7 million by 2018. The last electric rate increase in San Marcos was a hike of two percent in 2006.
Assistant City Manager Collette Jamison said San Marcos “probably needed a rate increase two years ago (2008),” based on the electric fund forecast. City Finance Director Steve Parker said council decided against rate increases in 2008 because it “wasn’t a good time economically to get that passed.”
In a regional comparison of other cities and Lower Colorado River Authority (LCRA) customers, San Marcos is near the median in average electric rates, based on the present rates. San Marcos came in more expensive than Greenville, Kerrville, New Braunfels, Fredericksburg, and Austin, but less expensive than the San Antonio, Seguin, Bandera, Central Texas, Fayette, Weimar, College Station, Bluebonnet, Georgetown, San Bernard, and Pedernales water systems.
The highest percentage rate jump is set for the drainage fund, with an increase of 42 percent or $1.66 on the average residential bill for FY 2011. Rate increases are projected every fiscal year until at least 2016.
FY 2011 drainage fund revenues are projected at $1,439,732, while expenses are estimated to come in at $2,441,492.
The drainage fund forecast shows a fund balance of just less than $1 million for FY 2010. If no rate increases is adopted, the fund balance is forecast dry up by FY 2012. With the rate increases, city figures say the fund balance would stay positive through FY 2017, with revenues exceeding expenditures by FY 2013.
Compared to other cities, San Marcos drainage rates are more expensive than Schertz, but less expensive than Bryan, Austin, Denton, College Station, Georgetown, and San Antonio.
The last rate increase for drainage was in FY 2007, when the average residential bill went from $3.21 to $3.96. Drainage fund expenses amounted to $848,937 in 2007, jumping to $2,441,492 for FY 2011, an increase of 188 percent. Dept service payments are up 268 percent to $1,186,594 since 2007.
Operations expenses include mowing of right-of-ways (ROW) and drainage channels. Since the drainage fund was implemented in 1999, the city has issued $19 million in debt for projects. Nine of 30 projects originally identified have been completed or are underway, and water quality treatment has been included in the projects, but was unaccounted for in the original study.
Jamison said Texas State no longer pays into the drainage fund after several state institutions of higher learning lobbied the state legislature to relieve them of the cost.
The cost for trash and recycling pick-up also is increasing in FY 2011. City staff has yet to propose a specific rate increase, awaiting council deliberations on a plan for required multi-family recycling.
Though city staff didn’t recommend water and wastewater rate increases immediately, the council directed otherwise so as avoid steeper increases in future years. Earlier increases would lessen the planned increases of six percent in 2013, 13 percent in 2014, four percent in 2015 and eight percent in 2016.
In 2008, San Marcos residents voiced strong disapproval of proposed water and wastewater rate increases during budget discussions, prompting councilmembers to forgo increasing water costs pending a water rate study.
Water and wastewater revenues for FY 2011 are projected at $26,816,824, while expenditures are estimated to come in at $27,709,250. The Water and wastewater dund balance is at about $14 million for FY 2010.
Interim City Manager Laurie Moyer said increased rates for water are needed because of necessary improvements to the system, including upkeep of infrastructure and capital improvement projects. Moyer also said San Marcos treats its wastewater to a high degree of quality and is committed in securing water for the next 50 years because of growth,, also contributing to the proposed rate increases.
Moyer said construction of a new wastewater plant has been delayed for about 10 years, because the need is not as urgent as when discussed in 2008.
State law requires municipalities to begin design preparations for a new wastewater plant once the existing plant reaches 75 percent capacity, and it calls for beginning of construction of a new plant once the existing plant is at 90 percent capacity. Moyer said San Marcos’ wastewater plant is currently at about 50 percent capacity.
According to the Texas Municipal League (TML) and city figures, San Marcos has the highest water and wastewater rates in Texas cities with populations of 50,001 to 75,000 for 2010. The average cost for residential water in the cities surveyed by TML are $22.23 for 5,000 gallons and $37.84 for 10,000 gallons. In San Marcos, those charges are $32.33 for 5,000 gallons and $54.58 for 10,000 gallons.
San Marcos also is more expensive than the cities in the TML survey in costs for commercial water and sewer charges, while League City is the only city in the TML survey charging more for commercial sewer.
“Our water rates are what they are because we have been much more proactive in securing water into the future and because we treat our wastewater to some very high standards,” Moyer said.
The total city budget is $145.4 million, with the general fund at $41.4 million, water/wastewater fund at $28.6 million, and electric utility fund at $52.3 million.
The city council will take up the budget on first reading on Sept. 7 and is scheduled to adopt it on Sept. 21.Email | Print