The typical city of Portage residential water user could see monthly water costs jump by half again, if the Public Service Commission of Wisconsin authorizes a change in the way the city raises money to cover the water system’s cost for public fire protection.
The topic generated some lively discussion at Monday’s meeting of the Portage Common Council’s Finance and Administration Committee.
City Administrator Shawn Murphy said the city’s application for a water rate increase, submitted in August, is still pending before the PSC. It is the first full rate increase the city has sought since January 2011, Murphy said.
The PSC also requires communities to collect a certain amount of money, calculated by the agency, to cover costs related to public fire protection, such as storing and accessing water for firefighting. That amount, in Portage, is currently $340,796 – and all of it comes from property taxes.
The city’s 2019 budget includes shifting that cost from property taxes to a surcharge assessed to all water users – even public bodies, such as schools, that don’t pay property taxes.
But the committee’s examination of the effect on water bills caused some members to wonder whether it’s an undue burden.
“For some of the people, it’s $60 more a year in their water bill,” said committee member Bill Kutzke. “And they’re not getting that money back in their Social Security checks.”
The figure that Kutzke quoted – $5 per month, or $60 per year – would apply just with the proposed water rate increase, without factoring in public fire protection.
According to information distributed to committee members, a residential water user who uses 4,000 gallons of water per month would see a 21.45 percent increase in a monthly water bill, without any additional surcharges for fire protection.
Add on a surcharge sufficient to cover half of the public fire protection costs, and the same user’s bill would go up 35.61 percent. To cover 100 percent of the fire protection costs, the increase would be 50.03 percent.
Murphy noted, however, that the city has to collect money to cover public fire protection one way or another.
And doing so with the water bill would allow entities that don’t pay property taxes to share the costs of the fire protection that they, too, utilize, he said.
Committee member Mark Hahn said he struggled with another reality: If the cost of public fire protection is shifted away from property taxes, then the city can keep collecting the same amount in property taxes, and use the money for other purposes, without running afoul of the levy limit that the state imposes on cities.
“I want to be fiscally responsible,” Hahn said. “But I don’t want the city to be financially strapped, either.”
Murphy noted that it is a challenge for many cities, not just Portage, to operate within a law that limits annual increases in property tax revenues they’re allowed to collect to a percentage of growth stemming from new construction. Many cities, including Portage, have had little or no new construction for years, yet costs of operating the municipality keep going up.
The city’s current budget is predicated on the assumption that all of the public fire protection costs will come from water bills, but only if the rate increase goes into effect in the second half of this year, Murphy said.
It’s the PSC, and not the common council, that determines whether some or all of a city’s public fire protection costs are raised via water rates.
Murphy said the commission is waiting to hear from the city as to whether it wants to transfer half of its fire protection costs, or all of them, from property taxes to water bills. Then, he said, the PSC would issue the new water rates, based on the city’s wishes.
When the PSC finalizes the rates, a telephonic public hearing will be scheduled. The city has asked the rate increase to go into effect in July.