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Water customers face higher rates across county

This has not been a good year for municipal water users, as every city water department in McNairy County, except one, has raised its rates.

Eastview has so far been able to avoid raising its rates, but but may still have to.

At its March meeting, Eastview City Recorder Emodene Smith told the water board that a state audit showed that it had lost money for the second straight year. City Attorney Craig Kennedy then said the state would probably make the town raise its rates. 

The town decided to investigate the matter first, suspecting it may have been overcharged by Selmer, which supplies its water.

In its April meeting, Eastview board member Lucy Martin challenged her fellow board members to find savings in order to avoid the increases.

Following that challenge, the city discovered it had indeed been inadvertently over-billed by Selmer. 

Selmer Public Utilities Director Richard Ashe confirmed the over-billing last week, attributing it to a computer error.

In light of that discovery, Eastview’s water department revenue projection for fiscal year 2011-12, which begins July 1, assumes that rates will not go up, City Recorder Emodene Smith told the Independent Appeal in May. 

The Eastview water board has approved the budget on two readings. They will vote on it on the third reading June 21. If approved then, it will become final.

Selmer, on the other hand, raises its rates every year automatically to account for inflation, according to Ashe. He said rates for Selmer water customers will go up only 1.3 percent this year because of that.

Ashe attributes Selmer’s rates not going up in real dollars to several factors. One is that unlike most water departments in McNairy County, Selmer has some industrial customers. Another is that grants count as income and help the department’s balance sheet stay in the black.

“Our budget last year was about break-even. Grants funded depreciation,” he said.

One common criticism local officials make of these audits is that a department’s income can exceed its expenses, but the state auditors will still consider a water department to be showing a loss if its liabilities exceed its assets. This often happens because of depreciation.

“Do I agree with it? No. Do I get a vote on it? No. That’s just an item where they tell you what to do and you say, ‘Yes, Sir’ and ‘Yes, Ma’am’ and go on,” Ashe said.

As previously reported in the Independent Appeal, the increases started last year with Michie. 

At its July meeting, Steve Wyatt of the Metropolitan Technical Advisory Service, told the Board of Aldermen that the city’s water department  had an operating loss for the the 2008-09 and would have one for the 2009-10 fiscal year. 

The Board then voted to raise rates 25 percent. This was the first water rate increase for the city in five years.

In a later interview, Mayor Don Greer said rates had to be raised to take care of depreciation and rising prices for chemicals used to treat the water.

At its March meeting, the Ramer City Commission voted to raise its water rates 10 percent for each of the next three years. The commission approved the plan in April and after approval on third reading in May, it became final.

Bethel Springs then raised rates at its April meeting after a state audit found it had lost money for two consecutive years. The state requires a city to raise rates if it loses money for two straight years.

According to City Clerk Deborah Sullivan, the state passed a law that triggers an audit if water loss is above 30 percent. After auditing the department, the state concluded that the Bethel water department had shown an accounting loss for the past two years.

City Recorder Erin Pickle said that the department’s income was greater than its expenses but that because of depreciation, liabilities exceeded assets. Sullivan said that Bethel had not raised its rates since the late 1980s.

The Adamsville City Commission voted to raise its rates Monday in order to prevent the state from mandating rate increases.

Adamsville had not raised its rates since 1999.

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