City water rates to rise 10 percent with 2009-2010 budget

The city's water and sewer fund is an enterprise fund that must stand alone and meet strict mandates from the state of Tennessee. In the past, an enterprise fund could not lose money for three consecutive years without action from the state. This year, state officials changed that time frame to two years, a decision that required immediate action from city officials.

At a recent budget hearing, Dyersburg Mayor John Holden, City Treasurer Steve Anderson and members of the Finance Committee discussed changes in state regulations and the history of the struggling water fund. Those issues, coupled with the city's loss of industry and conservation efforts from existing customers of all sizes, resulted in a sharp decrease of water sales for the 2008-2009 fiscal year.

Anderson provided committee members with a 15-year history of the city's water and sewer sales and net revenue, a graph showing net revenues of the fund for previous fiscal years and a comparison of water and sewer sales for fiscal year 2008 and 2009 and their effect on the water and sewer fund.

"This information is being provided to you to help explain the necessity for an increase in the water and sewer rates in the 2009-2010 budget," said Anderson in a cover letter. "If you would like an additional information or have any questions please let me know."

Unfortunately, Holden and members of the Finance Committee were all too familiar with the fund's problem and have been discussing it throughout much of the budget process.

As residents, existing industry and large customers look for ways to conserve water and reduce their expenditures, city water sales are decreasing and bringing in less money to the fund. A fund that was just getting back on its feet after losing money for seven consecutive years - a total of $3,409,061.78 from fiscal year 2000 to 2006.

At a recent budget hearing, Anderson and City Gas, Water and Sewer Superintendent Mike Morgan reported that industries like Huish are implementing recycling procedures for the water they use and the city school system has installed separate water meters on their sprinkler systems to lower their sewer fees. While these practices help curb expenditures for the city's larger utility customers, they also decrease the amount of funding collected by the water and sewer department.

"During fiscal year 2009, water sales decreased by 9.34 percent and sewer sales decreased by 5.77 percent, resulting in an estimated loss of $455,420," said Anderson in his report.

The water and sewer fund earned net revenues of $164,991.70 for fiscal year 2007 and $37,036.76 for fiscal year 2008. A plummet to losing nearly $1/2 million in 2009 made immediate action necessary to avoid state intervention.

"The closing of Dyersburg Fabrics in fiscal year 2002 caused an 8.2 percent reduction in water sales and a 42 percent decrease in sewer sales, resulting in a decrease in revenue of $1,459,875.61," stated Anderson's report. "Total revenue for fiscal year 2009 was less than the total revenue for fiscal year 2001, which was the last full year that Dyersburg Fabrics was open."

A comparison of water sales from fiscal year 2008 to fiscal year 2009 shows a 3.47 percent decrease in residential water sales, a 2.07 percent decrease in rural water sales and a 4.15 percent decrease in commercial water sales. In that same time period, industrial water sales plummeted 22.29 percent.

Sewer sales from fiscal year 2008 to fiscal year 2009 reported 1.36 percent decrease for residential customers and a 5 percent decrease for commercial customers, while industrial sales decreased 16.74 percent.

The result? A combined shortage in projected water and sewer revenues of $518,896.

The 2009-2010 budget's 10 percent increase in water and sewer rates will provide just enough revenue to bring balance back to the fund, if no unforeseen problems occur.