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City Hall hosts opposing viewpoints on proposed water rate hike

Wednesday, August 25, 2010 by Josh Rosenblatt

Two simultaneous presentations at City Hall yesterday shed light on the debate over a proposed residential rate hike for water use in next year’s budget. In one corner stood David Anders, assistant director of the Austin Water Utility, who was presenting the utility’s quarterly financial report to the Council’s Audit and Finance Committee. In the other, a collection of city environmental activists, led by the Save Our Springs Alliance, who were holding a press conference calling on City Council to vote against any rate hikes in the FY 2011 budget.

 

In the proposed budget, the water utility is calling for a 6.1 percent rate hike for all residential customers.

 

According to Anders, the need for the rate increase is the result of several factors, many having to do with rising costs and declining usage. “The costs associated with our operating requirements are going up over $5 million next year,” he told In Fact Daily. “The debt-service requirements that we have to pay on our existing and projected debt are increasing as well.”

 

The utility is also facing a $43 million shortfall off the proposed budget for FY 2010, primarily from water and wastewater revenue. Anders told the committee that the steep decline in revenues is the result of, among other factors, restrictions on water use during the drought that plagued the city during the early part of this fiscal year, the current national economic situation, and conservation efforts. All told, these factors have contributed to a 4 percent decrease in usage in the city. Hence the need for higher rates.

 

For the environmental community, however, such a decline in water usage deserves rewarding, not increases. “We shouldn’t be punished for our conservation efforts by having to pay more money for the same water,” Colin Clark of the Save Our Springs Alliance told reporters at the press conference. Clark spoke on behalf of several local groups and citizens that he said stand in “unified opposition to rate hikes,” including the Austin Sierra Club, Clean Water Action, SOS, Change Austin, PODER, the Austin Neighborhoods Council and Public Citizen.

 

Their opposition to the hikes boiled down to two main arguments. One, in the current economic climate, Austinites can’t afford another rate hike, which would be the eighth in as many years. According to the group’s literature, the impact to Austin ratepayers by 2015, the last year of projected rate increases by the water utility, would be a cumulative 134 percent increase since 2004.

 

“We’re in an economic recession and Austin families are struggling to pay bills,” Clark said, “Now is not the time to make water more expensive.”

 

The second reason for community opposition, Clark said, is the belief that the rate hike is being proposed primarily to help the city pay for the controversial Water Treatment Plant 4, which protestors say will cost the city more than $1 billion. 

 

The rate hikes, Clark said, will be used to “pay for billion dollar water treatment plant we don’t need and can’t afford. … The way to keep our water utilities bills low is through conservation, not through a boondoggle construction project.”

 

Mayor Lee Leffingwell told In Fact Daily, “It’s a deliberate distortion of the truth to say it’s a $1 billion dollar plant.” Instead, he said, the plant will cost about $500 million. He compared the billion-dollar statement to saying that a house with a $300,000 price tag actually costs a million dollars because of the price of financing over the long term.

 

“The rates are reasonable compared to peer cities and other cities around the state,“ Leffingwell said. “The rates are also reasonable compared to other services, such as electricity. But let’s keep in mind here that water is an essential service. We’re not just talking about drinking water; we’re talking about water for safety, being able to fight fires and so forth … this is not just water that you use on a routine daily basis but there’s an additional 10 percent built in for emergencies.”

 

The environmental groups didn’t agree with Leffingwell’s notion of reasonable rates, claiming that the proposed increase would make Austin the most expensive city in the state for water and wastewater.

 

According to data provided by the Austin Water Utility in response to a question by Council Member Bill Spelman, for FY2010, Austin is ranked fourth in water rates among major Texas cities, behind neighbors San Marcos, Pflugerville, and Cedar Park. It’s impossible to say where Austin will stand on the list in FY2011 if the proposed rate hikes are enacted. 

 

As for WTP4, Anders acknowledged that the plant was one factor taken into consideration when the utility was contemplating raising residential rates.

 

“WTP4 is another one of our projects that we’re planning to build,” Anders said. “We’ve estimated that the percentage increase for WTP-related projects for next year is 1.9 percent. Over the five- to six-year period that we’re constructing the plant, WTP4 is going to contribute about 13 percent to our increased bills. There will be incremental increase over the next five years in costs for WTP4.”

 

He does not believe, however, that raising rates on customers who have shown good conservation habits amounts to a punitive measure. “If there was enough conservation to reduce costs significantly and avoid a rate increase, we would definitely do that,” he said.

 

Citizens can take part in a public hearing on the proposed rate increase at this Thursday’s Council meeting, set for 4pm.

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