Sitka is putting together its budget for the coming year, and earlier this week assembly members met to discuss the city’s enterprise funds. Those are the crucial entities that pay for Sitka’s water, wastewater, solid waste, electric and harbor systems — and bill consumers to cover their costs.
KCAW reporter Rachel Waldholz is tracking the city budget. She sat down with News Director Robert Woolsey to run through the numbers.
Rob: So Rachel, what was the big takeaway?
Rachel: The big takeaway is that rates are going up.
The city budget proposes increasing wastewater rates by 4.9%. Water rates would go up by 10%. For solid waste, the city is budgeting an increase of about 13%, but that’s an estimate. Sitka is in the process of awarding a new solid waste contract, so it will depend on the result of those negotiations.
For electricity, the city is budgeting a 14.9% increase, but the Sitka Assembly has two proposals before it. One would raise rates by about 23% this year. The other would spread that increase over a couple years.
Rob: What would that mean for an average family?
Rachel: We did the math for an average Sitka household. That means you use about 1,000 kWh of electricity each month. Right now, you’re paying about $240 [$243.30] a month for utilities – that’s water, sewer, garbage and electricity.
And it all depends on which electric rate increase the assembly chooses, but with the smaller rate hike this year, that bill would go up to about $260 [$260.97]. So that’s an increase of about $20 [$17.67] a month.
The larger electric rate hike would mean that utility bill would jump up to about $280 [$281.97]. That’s an increase of about $40 [$38.67] a month. So, it’s pretty significant.
To put it differently, the smaller increase would amount to about $200 more each year [$212.04]. The larger increase would be about $460 more a year [$464.04].
Rob: A lot of this is going to be news to people, except for the electric rates. That’s sort of been on the radar for awhile, because the electric fund has been draining its reserves to meet payments on the Blue Lake Dam. But why are the other hikes are necessary?
Rachel: Well, there are different issues in different funds. But the big picture, and it’s the same thing we heard last year, is that the amount of money coming in from ratepayers isn’t enough to maintain and replace existing infrastructure, whether that’s water mains, sewer lines, or harbor floats. These projects are expensive.
For instance, Finance Director Jay Sweeney gave me the example of the Lake Street sewer line, which runs from Sawmill Creek Road to Arrowhead Street. That’s less than half a mile, but replacing it will cost about $1.6-million.
In the past, Sitka has relied on state money for a lot of these projects. But it’s not clear that money will be available in the future.
Rob: Rates went up last year as well, didn’t they?
Rachel: Yes, last year wastewater went up by about 9%, water went up by about 13%, and electricity went up by about 10%.
And Sweeney told the assembly that Sitkans needs to get used to seeing rates go up every year. Hopefully not by double digits — the goal is to get through some double-digit increases, and then institute smaller yearly increases to keep up with the cost of maintaining infrastructure.
One thing to remember is that Sitka went for years without raising rates in some of these funds. In the water fund, for instance, the city raised rates once between 1992 and 2009. So these funds are now catching up.
Rob: What did the assembly have to say?
Rachel: Well, it was a work session, so the assembly can’t take any formal action. It’s really a time for assembly members to hear how city staff came up with the budget and ask questions. And there weren’t a ton of questions. There also really weren’t any objections, or at least none that were said out loud.
I spoke with Mayor Mim McConnell and Deputy Mayor Matt Hunter after the meeting, and Hunter said he hadn’t heard anything new. They knew that these funds need more money coming in.
When I asked how much of an increase is too much, McConnell had this to say:
McConnell: It’s not just utilities. It’s all the other costs of living here in town that gets everybody. And really, utilities aren’t that high. It’s food, and it’s housing, and transportation [in and out]. All of that stuff is so sky high for this isolated community. And so it’s unfortunate that you add utilities onto all that, and people just go, No! I can’t take this anymore! It’s too much! And it’s like it’s the straw that breaks the camel’s back. Nevertheless, these increases need to happen.
Rob: I think I’ve heard the mayor say this kind of thing before. Sitka has just gotten more expensive, and our utilities, as a proportion of our overall expenses, are not that large.
Rachel: And that really is the message from the city. Whether citizens see it that way remains to be seen.
Rob: So, what’s next in the process?
Rachel: There’s another work session this coming Tuesday, May 5. That will be the third work session on the budget, and they may try to squeeze in a fourth. The actual budget will come before the assembly at their regular meeting on May 27. The full budget has to be approved by the end of June.
But the thing to remember is that even if the assembly passes a budget that includes these rate hikes, each of these increases has to be approved as a separate ordinance. So each increase will come before the assembly, and the public will have a chance to weigh in then.
MONDAY, May 4, 5 p.m.
Special Assembly Meeting (Electric Rates, 2nd reading)
TUESDAY, MAY 5, 6 p.m.
Budget Work Session #3
WEDNESDAY, MAY 27, 6 p.m.
Regular Assembly Meeting, (Budget, 1st reading)
Rob: And the first one is already here, right?
Rachel: Yes, this coming Monday, May 4, the assembly will hold a special meeting to vote on electric rates. Assembly members have two proposals before them, Ordinance 2015-17, which would raise rates by about 23% this coming year; and Ordinance 2015-23, which would raise rates by about 6% this coming year, with the assumption that there would be equivalent increases in each of the next several years.
You can find more coverage of the Sitka Assembly here.