As most of us know, water rates in Rifle went up on Sept. 1 to pay for the new water treatment plant. We saw the increase on our October bills, about 56 percent for a 7,000 gallon per month user.
By ordinance, rates will rise again on April 1 and add another 34 percent to the bill of a 7,000-gallon per month user. These rates will stay in effect until the plant is paid for in 20 years.
City council was not happy with such a large increase, so they directed staff to look in every nook and cranny and turn over every stone to reduce our water bills.
They identified a couple of outstanding loans and paid them off to save over $50,000 in future interest. And they decided that increasing the city sales tax would mean a large reduction in our water bills.
City council discussed this in open meetings, with citizen input. Suggestions ranged from a 1/2 cent to a one cent increase. Eventually, council directed staff to prepare a ballot initiative, question 2A, to increase the city sales and use tax by 3/4 of a cent. All money from the tax increase will go to pay the debt service on the water treatment plant. As soon as the plant is paid for, the tax will end.
Passage of 2A will allow city council to:
1. Direct a full evaluation of the tax and have staff revise the September water rate hike downward. The new rates would generate only enough revenue to pay the debt service and any increased operation and maintenance on the new plant.
2. Eliminate the planned April 1 water rate increase.
There are several benefits to the tax hike:
• The tax may pay up to 70 percent of the debt service.
• The base fee could drop to $24 a month and the September rate hike could be reduced.
• The tax will be retired as soon as the bonds are paid. Should tax revenues increase with an improving economy, the bonds would be retired early, as would the tax.
• Visitors to the city help pay for the water plant, which reduces the amount paid by Rifle citizens.
There are also detriments:
• Using sales tax dollars changes the status of the water enterprise as viewed by state statutes. But nothing will change in terms of management.
• Should the economy sour and tax revenues decrease, adjustments in other revenue sources will be made. That could include your monthly bill. However, staff's estimates are very conservative and include several backup options to consider before this would occur.
What would happen should 2A fail?
Nothing would change. The two rate increases would stay the same. An increase in the economy, followed by a revenue increase, would not likely affect the 20-year bond payoff schedule. A decrease in the economy, followed by a drop in water revenues, will cause rates to go up, after the backup options are reviewed.
Some people are against tax increases, period. Probably because most sales taxes are money out of their pocket, used for things they don't see as a personal benefit.
This tax is different, because every citizen wants clean, safe water, and it allows every citizen to keep money in their pockets whenever a visitor pays the tax.
Ballot decisions are never easy. I hope this discussion helps Rifle citizens make a wise choice.
Jay Miller is the mayor of Rifle.