2013 will not be a very lucky year for rate payers in Sitka.

At an assembly budget work session last night (Thu 5-3-12), city finance director Jay Sweeney announced that four of Sitka’s enterprise funds would be looking for rate increases next year.

The four funds affect everyone in one way or another: electric, water, waste-water, and harbors.

The enterprise funds function like separate businesses within city government. They raise their own revenues and pay their own expenses, including debts. It all works pretty well until a major project throws the formula out of balance.

In the case of the electric fund, it’s the Blue Lake hydro expansion. Sitka will receive about half of the $100-million dollar project from state grants. About half of the remainder – around $22-million – was raised by selling electric revenue bonds in 2010.

The new bonds didn’t affect Sitka’s electrical rates because the city paid off the Green Lake hydro project at about the same time.

Now, the city is looking to raise the rest of the money needed for Blue Lake, plus buy additional backup diesel generators. The total bond package will amount to over $30-million.

Sweeney told the assembly that these bonds will sting.

“We simply are not now achieving the net revenue in our electric system that would support the amount of bonding that we’re looking to engage in. So, the only way to have that funding in place would be to accelerate that process and put a very large rate increase in place, or look for some other type of funding.”

Sweeney reminded the assembly that the Blue Lake expansion is “the largest project the municipality’s ever seen.” The Electric Department will present a proposal for a graduated rate increase at its next budget work session on Monday, May 21. An ordinance would likely be drafted and offered sometime after that. Any rate increase would go into effect for the 2013 fiscal year, which starts on July 1st.

The electric fund’s problem shared – to lesser degrees – with the three other funds expected to raise rates next year. The water fund is going to have to provide an alternative water supply for the community during Blue Lake construction. The cost is pegged at about $5-million. Sweeney said a rate increase of 14-percent will be needed to pay down the loan.

The wastewater fund is not facing any single major expense, but the whole system is deteriorating, as demonstrated by last winter’s chronic breakages. Sweeney said there is too little money being set aside to pay to replace infrastructure or the wastewater treatment plant. Again, a 14-percent increase in the offing. It will raise about $300,000 a year.

And finally, Sitka’s harbor fund will need shoring up to cover the local share of the replacement of ANB Harbor next year. That project will cost $8.5-million, with half coming from the state. Sweeney said Sitka’s share will likely come from moorage revenue bonds, which will be paid back through an increase in moorage fees. A proposal spelling out the exact terms of the increase will be introduced at the next meeting of the Port and Harbors Commission on May 24th.

On a brighter note, Sweeney said the rest of Sitka’s enterprise funds are doing fine. They include solid waste disposal, the airport terminal, marine service center, management information systems, central garage, and building maintenance.