Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, May 18, 1993 TAG: 9305180141
SECTION: CURRENT PAGE: NRV-3 EDITION: NEW RIVER VALLEY
SOURCE: PAUL DELLINGER STAFF WRITER
DATELINE: PULASKI LENGTH: Medium
Pulaski Town Council will have to start grappling with that question tonight.
The water fund is losing money at a time when major improvements need to be made in a deteriorating system and its 70 miles of aging water lines.
The cash balance in the water fund was $149,518 about this time two years ago. A year ago, it was down to $111,767. As of the end of March, the balance had plummeted to $17,000.
Assistant Town Manager Rob Lyons told the town's utilities and finance committees at their joint meeting Saturday that accounting methods, rising operating costs, revenues below budgeted levels, a $16,000 jump in debt service payments and a reduction of water use all contributed to the decline.
Other reasons why a rate increase seems unavoidable include utility obligations to which the town agreed during its last annexation and higher governmental requirements for water quality.
Town Manager Thomas Combiths and Lyons will put together a "laundry list" of projects needed to upgrade the water system and serve newly annexed parts of town. Town Council will have to decide how to pay for them.
"And this is top priority, we understand that - next to the budget," Combiths said.
Councilman Andrew Graham, who has been warning for years that rates needed to be raised, told Combiths he was sorry that the new town manager was just starting as water problems were growing.
Combiths said much of the nation is in the same situation, with its infrastructure wearing out and having to be replaced.
Two Pulaski industries, Magnox Inc. and Refro Corp., are the biggest consumers of water among the town's estimated 4,200 water customers.
But lately, even though they got a billing break as high-volume users in 1992, they have been using three million to four million gallons less per month this year.
At the end of 1991, council approved a rate structure under which everyone pays $6.38 for their first 3,000 gallons of water.
Beyond that, the costs per 1,000 gallons drops to 99 cents for the next 20,000 and progresses down to 52 cents for consuption above 5 million.
Graham and Don Crispin were the only council members to oppose that change. Graham argued that rates were generally too low.
"I think that we were blackmailed into that rate reduction," Crispin said, referring to Magnox saying it would build its own filtration plant if the town gave it no rate break.
If that happened, it was estimated at the time that the town would immediately lose $193,000 a year in revenue. The high-volume rate schedule cuts about $38,000 from Magnox's bill.
Nevertheless, Crispin insisted he would not support an increase in overall rates while high-volume users were getting a break.
"I'll guarantee you that I'm not going to vote for any rate increase on the general public," he said.
"That's fine. We can just turn off the spigot," Mayor Gary Hancock said.
Magnox and Renfro are the only users of more than 5 million gallons of water a year. They are consuming more than 45 percent of all water produced by the town.
Hancock noted that they pay more than a quarter of all water revenue the town gets. The loss of any sizeable part of that 25.62 percent would leave the water fund even worse off than it is now, he said.
About 85 percent of all water revenue comes from the sale of water. The rest is from connection fees, service charges and other sources.
by CNB