Late last week, this publication discussed how City Staff wanted to raise water rates 7% a year for the next five starting, staring in 2027.
Troy’s Looking for Steep Increases to Utility Bills
Troy residents may see water rates rise 7% every year for five years, starting in January. The Finance Committee of City Council takes this up Monday, October …
On Monday night, the council’s Finance Committee, chaired by Todd Severt, backed a slower start than city staff asked for. Here is what happened, why, and what to watch.
City staff asked for the 7% water rate increase every year for the next five years arguing that water rates have not gone up since 2017. Staff said that without changes, the water fund could run a deficit starting in 2028. Costs have risen, and massive projects are coming. The largest is a $2.5 million replacement of the carbon dioxide tank at the water plant. City staff said the tank is at the end of its life, and if it fails, the city has no drinking water until it is fixed. The plan also includes a $7.3 million renovation of the maintenance facility in 2030, plus meter replacements. For sewer, staff asked for less. They recommended 2% a year, instead of the 5% increase already scheduled for 2027.
The committee did not take the 7% plan as written. It agreed to recommend a stair-step of 5% in 2027, 5% in 2028, 7% in 2029, 8% in 2030 and 9% in 2031. The sewer plan stays at 2%. Both now go to the full council for a final decision.
The reason for a lower rate in the beginning of the five year period came up again and again. Members said residents are in an “affordability crisis,” and that hitting people with 7% right now would be hard. Committee member Susan Westfall said an extra $20 could mean someone goes without their prescription. Council Member Madison Hickman asked whether higher rates could be announced on utility bills, so families have time to plan.
Committee members also pointed to history. Troy held water rates flat for years, then raised them sharply. Rates stayed at zero from 2006 through 2009, then rose 10% in 2010. Rates were flat in 2013, then rose 6% in 2014. Members said that pattern is unfair to taxpayers and unfair to council. They asked staff to build a baseline plan for years 6 through 10, so no one gets hit with a surprise again. They also said the 9% increase in 2031 will likely be reviewed, and the whole plan will get a check in year four.
Here is the part worth understanding. The stair-step starts lower, but it ends close to where staff’s plan ends. Percent increases stack on top of each other. Seven percent for five years adds up to about a 40% increase in five years, not 35%. The committee’s plan adds up to about 39%. The city’s memo shows it. A sample mid-level water rate of $45.94 today would reach $64.43 in 2031 under staff’s plan. By our math, it would reach about $63.80 under the committee’s plan. Resident Steve Henriksen raised the stacking point at the meeting. Staff said its tables already account for it. So the plan eases the first two years, but it does not shrink the total much after the five years.
There is more to watch. Staff’s own tables show the water fund still ends 2031 below its target balance, even with 7% a year. A slower start also collects less money early on. By the rough estimate, that could be about $1 million less over five years. The committee said its numbers were worked out quickly, and that it will review in year four. It is anticipated that the final plan presented to council will have the city’s updated tables, so residents can see how the water fund holds up under the new plan and compare that to what was originally proposed.
In the end, the committee took a more incremental approach in the beginning of the five year period, but that means a real possiiblity for larger increases in the back half of the planning period, especially if collections do not meet the city’s projections.
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