Two constituents came forward at the Orchard City Town Board meeting on March 8 to question trustees about the water rate increase.
Jan Gage, a former trustee, expressed concern for senior citizens in town on fixed incomes who would be hurt financially by the doubling of water rates. Accountant Doug Keller questioned board members on their methodology for setting the rate hike.
Gage told the trustees, "I am concerned about those on a truly fixed income, that [the increase] will be a burden to them." She cited demographic research she had done and stated that 23 percent of Orchard City households are comprised of members who are over the age of 65 and "very possibly on fixed incomes."
There are 496 households with two or more occupants over 60 years old, she said. And, 25.5 percent of the town's residents are age 65 to 85, she added.
"I would ask you to think about that," she told the town board adding that "25.5 percent is a huge amount who could be hurt. I would like to bring that to your attention."
She told the DCI in an e-mail that "19.3 percent of the Orchard City population lives below the poverty line compared with 14.7 percent which is the national average."
Gage noted that seniors on fixed incomes are seeing increases in other living costs besides just water; for example prescriptions and insurance.
Trustee Bob Eckels replied, "I understand what you are saying and your sentiment." He hinted that there might be "some reasonable accommodation down the line."
But, concerning the financial picture of the water fund, Eckels added that to delay a water rate increase at this time "would be a dereliction of duty to the citizens of Orchard City. If we delay acting now, it would cause more suffering down the line."
Trustee Dick Kirkpatrick asked if the other residents of town would want to subsidize water rates for low income residents. Tom Huerkamp asked how many of the 25.5 percent of resident "would truly be hurt" by the rate increase.
The exchange led to a general discussion of income verification procedures and possible water bill assistance, issues on which no consensus was reached.
Accountant Doug Keller addressed the trustees and questioned them on the business basis that was used to determine the new water rates, which in some cases are being doubled. He told trustees that businesses use a cost-based approach to setting prices, not the revenue-based approach the town board water committee has used.
Keller explained that a business would establish its break even point as cost basis and then set rates accordingly. Setting water rates on a cost based analysis would be running the water utility "like a business."
Keller advocated an approach that would set the water system's fixed costs based on actual usage during the four lowest use months of the year -- November through February. Other variable costs could then be factored in and then the rates could be established.
"How many gallons [of water] do you have to sell to break even?" Keller asked.
Water committee member Eckels explained that break-even, or cost-based, analysis was not used in deciding to set the town's new rates. Rather, the water committee used a revenue-based analysis.
The trustee water committee's approach for setting the new rates had been to decide how much water fund revenue it felt was necessary and then set rates accordingly. Their approach accomplished the same thing as Keller's approach would, trustees asserted.
Water committee member Kirkpatrick said that the break even number Keller asked for is available and would be provided. He also explained that the town is playing catch-up with rates that haven't been raised for nine years.
A proposed recommendation that the water rate issue be delayed until Keller could provide a cost-based spreadsheet analysis for the water committee, a task that would have been completed in two days, was not acted on by the board which instead voted to increase water rates.
(See related story.)
Mayor Ken Volgamore added that the town is trying to build up a "savings account" in the water fund to self insure against major repair needs on the town's aging system.
"It's been going down hill for some time and we are trying to turn it around," Volgamore said.