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Council passes 2011 budget with smaller-than-proposed electricity rate increase

The council also voted to hire seven public safety personnel
Monday, September 20, 2010 | 11:45 p.m. CDT; updated 11:22 p.m. CDT, Tuesday, September 28, 2010

COLUMBIA – The Columbia City Council decided to lower the increase in the electricity rate from a proposed 3 percent to 2 percent as part of the approved fiscal 2011 budget. The budget is about $384 million.

The council voted unanimously for increases in other utility rates and additional firefighters and police; and it approved the city manager's proposed funding for Centro Latino's renovation project. 

Other utility rate increases for fiscal year 2011

All increases are per month.

  • Refuse waste: $1 per residence.
  • Sewer: 15 percent increase – $2.43.
  • Water: 10 percent increase – $2.28.
  • Electric: 2 percent increase – about $1.70.
  • Total increase per month: about $7.41.

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Electricity rate

The council approved the smaller increase because Columbia Water and Light is fiscally capable of operating with only a 2 percent increase.

Connie Kacprowicz, spokeswoman for Water and Light, said that although Water and Light is run by the city, it is still a business.

“A business needs to have a savings account,” Kacprowicz said. “Utilities have a certain amount of cash they need to keep on hand in case of emergencies.”

Kacprowicz said earlier Monday that the council had three different options for the electricity rate:

  • Stay with the proposed 3 percent increase.
  • Approve the 2 percent increase without cutting the budget elsewhere to make up for the difference.
  • Approve the 2 percent increase with budget cuts.

The council chose the second option but kept one budget cut: an $80,000 reduction to the general fund from the PILOT, or payments in lieu of taxes, program.

Water and Light is able go without the extra $1.16 million it would have received with the 3 percent increase because its revenue for this year was higher than expected. With a higher revenue, Water and Light was able to put more into its savings.

Tad Johnsen, director of Water and Light, said it is able to take on the fiscal reductions because August was a profitable month.

This was because of three factors:

  • Water and Light came in at 10-15 megawatts under its normal load, which was 5 percent lower than expected.
  • Market-wide, all of the loads were down, so it was able to buy on the market at a lower price.­
  • Natural gas prices were low for summer.

All of these brought the Water and Light reserves to over 18 percent of their total revenue for the year, which was $120 million.

“Those are very adequate reserves for our electric utility,” City Manager Bill Watkins said.

Water and Light likes to have a reserve that is 16 to 20 percent of its total income, Watkins said.   

“What we saw in August was, really, everything good that could happen, happened,” Watkins said. “We’re prepared to go ahead with the 2 percent rate increase. That is the fiscally prudent thing to do.”

The new monthly increase for electricity per month would be about $1.70 at the 2 percent increase, instead of $2.54 at 3 percent. This brings the total monthly increase for utilities — solid waste, sewer, water and electric — to $7.41, instead of $8.25 with the 3 percent increase.

“We think about the city’s customers," Mayor Bob McDavid said. "We think about the fact that $8 a month is a big deal to the 6 percent that are unemployed. It’s a big deal to the 25 to 30 percent that are on a fixed income. We know that this is your money. It’s not our money to spend.”

Sixth Ward Councilwoman Barbara Hoppe said the lower rate increase will help with energy conservation.

“I think it’s important to keep the rates down,” Hoppe said. “The Water and Light Department has done a very strong job of trying to reduce energy use and conservation. That is the way to hold the rates down, or the dollar down, is to do more energy conservation.”

The council unanimously voted to reduce the electricity rate increase, increase sewage service utility rates, increase solid waste utility rates and increase water utility rates.

Public safety

The council decided to fill four vacant firefighter positions because of two retirements and two resignations, at a total cost of $344,000 to the Columbia Fire Department. 

The current budget allocates 11 months of pay for new hires because the department estimates it will take about a month to fill the positions. Then the new hires will participate in three months of paid training.

They will partially staff a new two-person vehicle at Fire Station No. 2, 1212 W. Worley St. To partly offset those costs, the Fire Department decreased its budget $150,000 in areas such as travel and training, according to a previous Missourian report

The Police Department will add one police officer and two dispatchers with the approved budget.  The new staff will cost $175,535, help already overworked dispatchers and improve community relations, according to a previous Missourian report. 

Other budget items

The City Council approved $88,000 for Centro Latino. The organization requested $145,000. The center is going to renovate 609 Garth Ave. to make it a community-style diner and a hub for Columbia’s Latino community. It signed contracts on Monday morning with an electrician, plumber and framer.

Watkins emphasized that he really likes this project, but the timing for the funding didn’t work. He said Centro Latino Director Eduardo Crespi may receive more money during the fiscal year.

“At this point we think that there will be probably as much as $50,000 on some projects that won’t be utilized that can be reallocated to the Centro Latino project,” Watkins said.

McDavid also emphasized the need for overall tighter budgets heading into next year.  Watkins mentioned in this year’s budget that fiscal 2012 is going to be tough. 

“I’m going to challenge every city manager: I don’t want you spending all of that money,” McDavid said. “I’m going to challenge you to come in 2 percent under your operating expense budget."

When the discussion on the budget ended, McDavid turned to Watkins, shook his hand and said: “Mr. Watkins, congratulations, you have a budget.”


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