Background:
The city last increased water rates 5% effective on bills in July 2004. During FY 2005-06 actual operational costs are projected to increase 15% above the prior year budget. Contrasted with this are water sales revenue budgeted to be nearly 7% more than the prior year based upon this increase and growth. The net differential is a negative $116,229 whereas revenues are projected to increase $281,000 and operational costs including staff and supplies will rise $397,229.
Cost increases are primarily related to personnel, supplies and internal costs. Actual revenues and expenses vary with temperature, rainfall and customer use sometimes compromising financial forecasts and potentially jeopardizing fund balances and bond coverage compliance. A revenue reserve account is employed to minimize such variations but an increase is necessary to adequately fund years where revenues fall short of expenses.
The average residential water bill using 1000 cubic feet in a month will increase $0.70 from $23.34 to $24.04 with this change. A commercial account using 3500 cubic feet in a month will increase $2.05 from $65.64 to $67.69.
The intent is to raise rates August 2005, monitor the balance of operational revenue to operational expense, adjust where necessary to provide adequate revenue to meet expenses and comply with bond coverage requirements and to update the rate model during FY 2005-06.
Included in this rate change is a 3% increase to cover charges for water used from the Talent Irrigation District system. Increasing the TID unmetered charge from $78.75 to $81.11 will cover the city's maintenance and repair costs and remain consistent with other customer increases. | 
