Monterey considering a monthly water usage allowance for residents to address a significant deficit in the water and sewer budget caused by the closure of the Purdue factory.
Finance Committee Chairman Jamie Phillips said the proposal adjusts the current base rate from a 2,000-gallon allowance down to 1,000 gallons. Phillips said this change is expected to generate approximately $235,000 in annual revenue for the utility fund.
“Taking it down zero to 1,000 would bring in about $235,000 a year and that would increase the bill $12 and some odd change for in city,” Phillips said. “It will show the state that we are do have some sort of plan in place, but that’s what we can consider for this next and last one.”
Mayor Alex Garcia said the city has already operated at a deficit for one year and must act to prevent the state comptroller from intervening to set rates. Garcia said the utility fund faces a shortfall because a major industrial employer is no longer contributing to the system.
“So I’m going to tell you that this is the best way,” Garcia said. “I know not everybody’s going to agree with that, but here’s the problem. We’ve already been one year in a deficit. We’re going to be the second year in a deficit. The comptroller’s office will come in and adjust those rates and you don’t want them to do that because they’re not going to do it the way we’re doing it.”
Phillips said the water and sewer fund is currently facing a projected deficit of more than $1 million. Phillips said the committee determined that department expenses for labor and chemicals are already at minimum levels, leaving rate increases or the use of savings as the only options.
“Our options are we take it out of LGIP again, or we do, we increase the water rates,” Phillips said. “That’s- that’s just it. That’s the two options we have. I think we might have to do both.”
Finance Officer Ella Dishman said the reduction in the base allowance will particularly affect senior citizens who typically stay within lower usage brackets. Garcia said the city initially waited a year after the factory closure to see if a new tenant would occupy the building before asking residents to pay more.
“Most of them is, is the elderly and the senior citizens,” Dishman said. “$24 is a lot to somebody on a fixed income, very, that’s a lot.”
Garcia said the city is implementing a step increase strategy to reach sustainability over two years rather than placing the entire financial burden on citizens at once. Garcia said while the former Purdue building has been sold, there is no timeline for when a new business will begin operations.
“No, like I said, we’re going to do a step increase,” Garcia said. “So this year’s one step, next year’ll be two step and then it’ll be sustainable.”
Phillips said the city is also working to balance a $52,000 deficit in the general fund through various department cuts. Cultural Administrator Rafferty Cleary said his department identified $17,500 in savings by reducing operating supplies and eliminating the advertising budget.
“I honestly would like to see it do it every six months,” Phillips said. “We do six months and then six months later you do the rest, do the other one.”
Phillips said the goal is to have the new rates and the balanced budget in place for the start of the fiscal year on July 1.