City studies utility service debt
By Michael Butler
"We're losing money every time anybody flushes the toilet," Tallassee mayor Johnny Hammock said of the city's utility pricing structure.
Jim Marshall, a consultant with Jackson Thornton Utilities, broke down the city's revenues and expenses on its utility services in a Nov. 13 work session at City Hall. The figures, based on the 2017-18 fiscal year, indicate an $833,491 loss per year.
Marshall recommends a raise in rates to offset those losses, a proposal the council will be considering in the coming weeks.
"People will say, it ought to be free. There's water all around us. Get a bucket and get all you want," Marshall said. "We deliver it to you. We clean it. That takes money."
Based on the numbers provided by Marshall, the city is where it needs to be on gas but is losing money on water and sewer services.
The city received $907,557 in gas revenues last fiscal year with expenses of $877,406 resulting in a profit of $44,090. It received $1,498,55 in water revenues with spending of $1,872,620 for a loss of $374,064. The revenues from the sewer service came in at $615,284 with expenses at $1,118,801, differential in the red of $503,517.
"We're could be one emergency away from being bankrupt," Hammock noted.
Jim Marshall from Jackson Thornton Utilities talks with council members about the city's utility costs
By the percentages, the city profits 3 percent on gas but is going in the hole 20 percent on water and 45 percent on sewage.
"With gas being in solid shape, we have no rate recommendations," said Marshall. "Sewer's the most obvious need. With water you have residential, commercial, industrial and wholesale. Your residential is in good shape on water.
"Wholesale is paying 53 cents on the dollar. You under recover about $374 thousand, $350 thousand of which is your wholesalers."
Marshall made no recommendations on residential water rates; however, wholesale prices are a different story. The city sells water wholesale to Friendship, Wall Street and Eclectic. A rate hike to $1.95 per 1,000 gallons was suggested.
Gradual rate increases could be coming for city sewage consumers. The initial proposal is to raise residential sewer rates by $11 per month per customer. The increase would be $16 monthly for commercial customers if approved by the city council.
"I hate it, but it's got to be done," councilman Jeremy Taunton stated.
Councilman Bill Godwin agreed. "We won't have any problem justifying why we're doing this."
"The council's got to discuss this. What has been recommended doesn't even get us to breaking even," Hammock added. "Personally, I love this job, but if doing the right thing costs me this position, I'll live with it."