Iola City Administrator Carl Slaugh is still crunching numbers to determine how much electric rates can be cut to balance an imminent increase in water rates.
Slaugh told Iola City Council members Tuesday that he hoped to have a final recommendation for both rate adjustments by the council’s next meeting Oct. 24.
Council members voted in September that the water rates be increased so the fund be made solvent. Slaugh estimated Tuesday that the city is losing about $200,000 annually in its water fund, necessitating an increase of about 13 percent to break even.
Slaugh is now looking at electric rates, as directed by the council, to determine how they should be cut so about $200,000 can be pared annually from the electric fund to balance out the water rate hikes.
Slaugh again appealed for council members to reconsider their order to tie the rate adjustments together, noting that utility rates and funds ideally operate independently. Each is supposed to be a fund that pays for itself, he said.
Cutting the electric fund, and potentially losing a portion of the electric fund’s transfer to the general fund, could result in cuts in manpower or services, Slaugh warned.
“The part that concerns me is that you … may end up in a few years with the same situation with the electric fund that we have with the water fund,” Slaugh said.
Slaugh noted that Iola’s electric fund was in dire straits about five years ago before commissioners raised rates and put in adjustments that passed increased electric costs to the city directly to the customer to prevent the fund from evaporating.
Losing revenue would lead to subsequent discussions about whether Iola’s utility funds should be used as revenue generators used to keep the mill levy static.
For years, Iola has supplemented its general fund with electric reserves in order to keep property taxes static.
If the electric reserves dip,” the city would either have to cut services or increase its mill levy, Slaugh said.
The city should keep its electric fund solvent by cutting transfers to the general fund if necessary, Councilman Ken Rowe said.
COUNCILMAN Joel Wicoff said the discussion about cutting the electric fund amounted to hypocrisy on the council’s part.
He noted that the council raised a fuss in August after learning the city had about $3 million in unencumbered electric funds, but nothing extra in reserve to eventually replace Iola’s two natural gas generators. Council members said previously they were led to believe by former City Administrator Judy Brigham that the city had another $3 million in reserve.
He also noted the city agreed to pay up to $130,000 to extend utilities to the new Allen County Hospital when it is built on North Kentucky Street. That money had not been budgeted, Wicoff said.
“I’m frustrated because we’ve got good technology in this town and we’re chopping it down bit by bit,” Wicoff said. “I’ll never support tearing down our community’s infrastructure.”
