The Santa Monica City Council voted Tuesday, June 21st, to raise Santa Monica water rates by six percent and solid waste rates by ten percent, effective when the fiscal year begins Friday, July 1st.
Customers can expect another water rate increase in January.
Craig Perkins, director of the City Environmental and Public Works Management department, recommended that a 12 percent water rate increase take place in January and a 12 percent solid waste increase take place July 1st.
Councilmembers voted to split the water rate increase between July and January so that customers would not have to pay a large increase at one time.
“By starting this six months earlier, we cushion the increase that we know is going to occur later on,” said Councilmember Ken Genser.
“Rather than wait for the last minute, we should do this now so there won’t be a big spike for people,” he said.
The six-percent water rate increase is a combination of a previously approved 3.8 percent consumer price index (inflation) increase and a 2.2 percent increase that councilmembers voted for last week.
Single-family households currently pay an average water rate of $52 every two months, or $26 per month.
When the full 12 percent rate increase happens, single-family households will pay an average water rate of about $29.12 per month.
A typical ten-unit apartment building currently pays an average water rate of $154 every two months, or $77 per month. Such a building will pay an average water rate of about $86.24 per month after the full 12 percent increase.
After discussions with city staff, councilmembers decided that a 12 percent solid waste rate increase was not necessary and lowered the rate increase to ten percent.
The ten-percent increase includes a previously approved 3.8 percent consumer price index (inflation) increase and a 6.2 percent increase voted for last week.
Single-family households currently pay an average solid waste rate of $62 every two months, or $31 per month.
A ten-percent rate increase will bring the single-family household solid waste rate average up to about $34.10 per month.
A ten-unit apartment building pays an average solid waste rate of $120 every two months, or $60 per month.
With a ten-percent increase, the average solid waste rate for the building would be $66 per month.
Water and solid waste rates will also increase for non-residential customers.
Utility taxes for water and solid waste will automatically increase.
Customers are taxed for utilities at ten percent of the total bill.
If the rates increase, the total bill increases and the taxes go up as well.
Perkins said the water rate increase will generate an additional $600,000 in revenue for the fiscal year that begins Friday, July 1st.
City staff had presented councilmembers with information last month during budget study sessions that the city Water Fund and Solid Waste Division would face shortfalls if rates were not increased.
“Delaying all action would be kind of in a sense inaction,” said city manager Susan McCarthy.
“If we grapple with it at a later date, the funds will have eroded further and the remedies would be more significant,” she said.
The Water Fund was facing a $3 million shortfall and the Solid Waste Division was facing a $2 million shortfall.
“I’m frustrated that this was brought to us only one month ago when these funds have clearly been in stress for some time,” said Councilmember Kevin McKeown.
“It’s really tough to raise rates on basic services, but this is a train that just arrived at the station,” said Councilmember Bob Holbrook.
City staff had proposed three plans to balance the Water Fund and Solid Waste Division.
The “timely recovery” plan would have involved a 31 percent water rate increase and a 20 percent solid waste rate increase.
The “intermediate recovery” plan ñ featuring 15 percent increases ñ would have balanced the Water Fund by July 2008 and Solid Waste by July 2007.
Councilmembers voted for the “extended recovery” plan that featured the lowest rate increases every fiscal year.
With “extended recovery,” the Water Fund will be balanced by July 2010 and Solid Waste will be balanced by July 2008, a city report said.
Perkins said the two funds have been experiencing rising costs “beyond the city’s immediate control.”
Those costs include expenses for electricity, vehicles, fuel, and employee insurance and retirement contributions.
McKeown said — and other councilmembers agreed — that the city should conduct comprehensive studies on both funds to find out where revenues and expenditures are going.
Councilmembers also voted to look at changing the water rate system to encourage conservation.
McKeown suggested that people who conserve water receive no rate increase and people who use excessive amounts of water receive a higher rate increase.