The News Guard By: Patrick Alexander
Lincoln City’s first attempt at a seasonal water rate increase has failed to raise the expected revenue, meaning City leaders will have to raise rates further or postpone water system improvements to balance the books.
Lincoln City Council approved the increase in June on a split vote, with the new rates coming into force July 1.
Rather than applying an across-the-board increase as in previous years, Council chose to charge more for additional water consumed during July, August and September, when demand is highest and supply is lowest.
The new rates were designed to encourage water conservation while increasing total revenues to the City’s water fund by 6 percent — roughly $175,000.
However, halfway through their first year, the rates have failed to come close to that target, City Manager David Hawker said.
Hawker said the City has seen only a 1 percent increase in water fund revenue, leaving staff trying to figure out where the plan went wrong.
“The methodology that we used to compute these rates was very complex and we were very conservative,” he said. “We didn’t want to generate more revenue than 6 percent and in doing so, we may have been overly conservative.”
Hawker said it is possible that the City overestimated the amount of water that customers would use during the peak season, resulting in lower-than-anticipated bills.
Customers outside the city limits received an unexpected break from the new rates, which left their water rates virtually unchanged by accident.
The resolution approved by Council in June set the rate for outside users at 200 percent of that charged to residents within the city limits, rather than the 212 percent they had been paying.
“That was a mistake on my part,” Hawker said, adding that he had always been told outside users paid double for water and included that figure in the calculations.
Hawker said the City will have to decide how to get “back on course,” adding that it either needs to increase revenues by raising water rates further or cut expenses by putting off some planned water system improvements.
He said transferring money from the general fund is not an option because the City operates its water fund as a business enterprise — with water fees expected to pay for all expenses of operating the system.