Villa Rica residents had been scheduled to receive higher utility bills in February, but those rate hikes are now in limbo due to a mayoral veto issued on Wednesday.

The City Council may meet as early as this week to schedule a vote to override the veto, which impacts the 2018 city budget that the council approved on Dec. 5. The rate hikes are a key component of the budget, because the additional revenues are meant to help the city improve its financial position.

On Wednesday, Reese vetoed two portions of the city's 2018 budget. The vetoes concerned two issues; one, a $45,000 line item for pay-parity for some city employees, but the second item has a more significant impact to the budget.

In his veto message to council, Reese specifically objected to a change in the city's policy to offer discounts to senior citizens receiving those city services. He said that even with those discounts, some seniors would still face rate increases that are too high.

City Manager Tom Barber said on Thursday that the action puts all the rate increases – not just those for seniors – “up in the air.”

Barber said that the council must meet in a special session before the end of December on another matter, and may do so next week. At that time, the council may schedule a vote to override both mayoral vetoes. It takes a “super majority” of at least four votes by the five-member council to override a veto.

If the veto stands, Barber said a replacement rate plan would have to be prepared.

The rate hikes had been integrated into the budget as a means to make the city’s water, sewer and sanitation services pay for themselves, rather than be subsidized by tax revenues. As things stand, those tax dollars are being diverted from other things needed by the rapidly growing city — such as more police, improved infrastructure, community development and administrative costs.

The rate increases are also part of a plan to phase-in higher fees over the next three years, meaning city residents could expect another rate hike next year.

According to city staff, residential customers who use 2,500 gallons of water per month will see an increase in their city bills of $8.05; customers who use 3,500 gallons will see a $10.11 increase; and those who use 4,500 gallons a month will see an increase of $12.17. The city estimates that an average customer uses 4,500 gallons per month.

These customers are those who use water, sewer, sanitation and solid waste (household garbage pickup) services.

Currently, seniors aged 65 or older are entitled to a discount on those rates. But with the new budget, the discount would be available only to those who have a maximum household income of $24,120 or less, and who are the primary titleholder or leaseholder on the property. All other seniors will pay the same rates as non-seniors.

Seniors use less water than other customers. The city estimates that low-income seniors who use 2,500 gallons per month will see an increase of $8.93 in their bills, while those who use 3,500 gallons per month will see an increase of $10.99.

In his veto message, however, Mayor Reese said he was concerned that some seniors may see even larger increases.

“I am concerned … that the accompanying change in our senior discount policy will cause many of our senior residents to receive utility bills in February that represent increases of more than 60% from what they currently pay,” Reese wrote.

Another part of the planned rate hikes – and which is now also on hold – would be the requirement that all city customers pay for household garbage pickup, even if they have not done so before.

The company that provides for pickup, Waste Industries, charges per each container it picks up and bills the city accordingly. But the company has also been raising its rate each year, based on the Consumer Price Index, while the city’s fee has remained the same, meaning that the city has consistently lost money.

Complicating that fact, around 370 customers pay for solid waste pickup only, while an estimated 150 people are having their garbage picked up without the city paying for it. In calculating their budget for the 2018 fiscal year, city officials recommended that all customers pay for the garbage pickup as a way for the sanitation service to pay for itself.

While city officials have acknowledged that the increased bills will impact all families of all incomes, they say the increases are necessary. They say the new fees will stop the subsidy of city services with the cash the city needs to run the rapidly growing city — and thus prevent a potentially large property tax increase.

All city utility services are so-called “enterprise funds,” which are supposed to generate their own operating capital, just as if they were private businesses. But because all these services — especially on the water-sewer side — do not generate enough revenues through fees to pay for themselves, the city has had to shift money from its general fund to support them.

The situation is more acute with the water-sewer enterprise fund, in part, because a portion of its revenue is supposed to be paying down the $34 million revenue bond that built its second wastewater treatment plant. The city now shells out $1.7 million a year to make that payment, but in 2020 that bond payment soars to $2 million.

By that year and without the rate hikes, city officials estimate the city will either have to raise property taxes or start cutting back on other city services — such as police and other administrative functions — at a time when growth in the city puts even more demand on those functions.

Earlier in the year, the city contracted with Raftelis Financial Consultants, headquartered in Charlotte, N.C., to study how the city’s various utility rates should be raised to make them self-sustaining. After several months of review, the company recommended that water revenue needs to be raised 20 percent; sewer revenue raised 75 percent; and sanitation and waste revenue increased 32 percent to afford the costs of providing those services.

With the new budget, the city planned to spread those increases over the next three years — or until the year 2020, when the bond payment increase is scheduled to hit. This means that city customers could expect another rate hike next year, and possibly another the year after that.

However, during a Nov. 30 work session with City Council, City Manager Barber said that the anticipated growth in the city population — along with the increased number of people using city services — could mean a third-year increase in fees can be avoided.

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