Iolans will pay more for water and electricity, City Council members decided Monday.
Council members voted, 5-1, to increase water rates by 3 percent, effective Aug. 1, while raising meter fees for residential electric customers $2.50 a month.
The increases are necessary, City Administrator Carl Slaugh said, because reserve funds for both utilities have shrunk dangerously low.
The electric reserve fund — which ideally would have between $3 million and $6 million — is down to $1 million in the bank, Slaugh said.
“For a fund with projected expenditures of … $1 million a month, that leaves little reserve to handle regular cash flow.”
Slaugh cited a number of factors for the low reserves.
For one, a cool summer and warm winter in 2014 meant customers bought less electricity, and thus brought less in revenue to city coffers.
Additionally, the city increased transfers from the electric reserves to Iola’s general fund to cover a budget imbalance for the Fire Department and Emergency Medical Service.
In addition to the meter fee hike, the city will increase peak demand electric rates for Iola’s two industrial customers, Gates Corporation and Russell Stover Candies, from $3 to $5 per kilowatt hour.
The maneuver will increase utility costs for both customers by about 5 percent, Slaugh said.
The higher fees and industrial rates will generate an additional $300,000.
Councilman Austin Sigg, who voted against the rate hike, said spending out of the fund remained his big concern.
“It seems like we are trying to adjust our revenue for our budget, rather than adjusting the budget to our revenue,” he said. “I’d like to see us spend less money.”
Council members Donald Becker and Aaron Franklin were absent.
The city, for generations, has used its utility reserves to supplement Iola’s general fund, in order to keep its property taxes low.
THE WATER utility reserves, meanwhile, remain inadequate to meet the annual $600,000 loan payments to the Kansas Department of Health and Environment, approved about 10 years ago to fund construction of Iola’s water plant.
The water fund operated at a deficit from 2008 to 2011, and rate increases then have helped, but not enough to bring the fund to a healthy level, Slaugh said.
Even with the increases, Slaugh noted more work to balance budgets would be necessary.
“If no changes are made to expenditures, it’d take us 10 years to bring up our reserves to a minimum of what we need,” he said.
SPEAKING OF…
Council members, who also looked at Iola’s 2016 budget, which needs to be approved and finalized by mid-August.
Based on projected revenues for 2016, and going solely off budget requests by department heads, the budget was $595,698 out of balance, Slaugh said.
Slaugh subsequently cut out some requests, earmarking $374,468 in possible reductions.
Many of the cuts dealt with deferring equipment replacement.
Council members eventually signed off on all but $45,000 of those cuts.
The Council did not indicate how to make up the remaining $200,000 deficit, either through increased property taxes, utility transfers or additional spending cuts.
