Utility rate study debated

By Seth Schmidt

City Administrator Madonna Peterson has asked the city council to reconsider a previous decision to not hire an outside consultant to conduct a utility rate study.
The study, to be conducted by the firm of ABDO, Eick & Meyers, would make long-range financial projections and make recommendations about future water and sewer rates. The study would determine how much city water & sewer rates need to increase in order to pay for millions of dollars of long-term bonded debt being taken on for city infrastructure improvements.
At their May 22 meeting, council members balked at okaying the $16,000 study. Instead, the council asked the city administrator to recommend an initial rate increase and conduct the utility study in-house. Council members felt that a financial audit conducted next year, would indicate whether rate increases implemented this year are sufficient to keep up with expenses.
Monday, Peterson asked the council to revisit the issue, stating that the future stability of city finances are at stake.
In a memo to council members, Peterson called the utility study “a necessity.” In determining what utility rates need to be charged to meet future obligations, the administrator wrote that she felt the study would serve as “an insurance policy” to “protect the future financial needs of the City of Tracy.” Peterson said she is also concerned about the cost of the study. But she indicated that the study would represent a huge time commitment for city staff, without any guarantees that the in-house data would be sufficient to project the city’s long-term needs. She said the study could be paid for over several years, to minimize the impact on the city annual tax levy.
“If I felt this study was something attainable from within a reasonable time frame, I would put every effort forth; however, I am only trying to protect the future financial need(s) of the City of Tracy.”

For more on this article, see this week’s Headlight-Herald.