Study calls for successive utility rate hikes in San Luis

SAN LUIS, Ariz. — A proposal recently presented to the San Luis City Council calls for successive utility rate hikes here, the first to make water service to financially self-sufficient and the second to expand it to handle the city's growth.

According to a study done by consultant Dan Jackson of Economists.com, the combined water and sewer rate that residents pay each month would need to be increased from $48.79 to $65.29 to make those services pay for themselves over the next four years.

The rate for businesses, meanwhile, would go from the current $119.82 to $152.72.

The city has for many years dipped into its general fund to cover deficits in the enterprise fund, the account that pays for water and sewer service and trash collection. The hikes proposed by Jackson would come on the heels of incremental utility rate increases previously approved by the council in recent years.

Despite those increases, water and sewer rates in San Luis remain 30 percent below the statewide average, exceeding only the rates charged in Wickenburg, Ariz., according to the study by Economists.com, a Plano, Texas, based firm that performs studies for municipal and public sector utilities.

Mayor Gerardo Sanchez said the council will be considering Jackson's recommendations in the coming weeks and months as it prepares to adopt a new city budget for the fiscal year that begins July 1.

The second part of Jackson's recommendation calls for additional rate increases to finance an expansion of the city's sewer treatment plant, installation of water filters in the water distribution system, construction of new water tanks, plus new water hookups on the west and east sides of the city.

The cost of those improvements are estimated at about $5.8 million, requiring another 48 percent increase in the water rate plus a 52 percent rate in the sewer rate, according to the study.

Sanchez conceded a proposal to raise utility rates is not a popular subject at a time of high unemployment and a fragile economy.

“This will always be a controversial subject. On one hand we have to get to a zero deficit, but we also need funds for the necessary projects for the growth of our city.

“More and more houses are beginning to be seen in San Luis, and we have to be prepared with the infrastructure.

“I agree that with the way the economy is, it's hard for anyone to hear about rate increases,” Sanchez added, “but it needs to be understood that the cost of providing (utility) service also is going up. What I can assure people is that we are going to make the best decision for the city and the one that least hurts residents.”

While the study calls for higher rates to take effect in March, Sanchez said the council will postpone a decision while it discusses the recommendations in work sessions leading up to the city council's April retreat, at which time it will define budget priorities for the new fiscal year that starts in July.