At Tuesday’s Mat-Su Borough Assembly meeting, Borough Public Works Director Terry Dolan presented the financial analysis of Talkeetna’s sewer and water system, and gave an indication of what the new rates may look like. KTNA’s Phillip Manning has more.
Last year, a grant from the state legislature paid for an assessment of Talkeetna’s sewer and water utility. That report covered the operation and condition of the system as well as the finances. On Tuesday, Mat-Su Borough Public Works Director Terry Dolan presented the fiscal portion of the assessment to the Borough Assembly. The report shows a significant annual gap between revenue and expenditure. Dolan says that does not come as a surprise.
“We knew at the beginning, but they verified that the revenues do not cover the cost of operating the water system. The difference is about $80,000 on the water side of this. And, the study also noted that there are no budgetary provisions for things like major maintenance or renewal and replacement, which are normal functions of a public utility.”
When the sewer system’s annual deficit is included, the number tops $100,000. With a small user base, the assessment says significant rate increases will be needed in order to close that gap. The recommended course of action amounts to a thirteen percent annual increase for five years. The report also included a number of alternate rate structures to the one currently used. Currently, residential users pay a flat fee, and commercial users pay a flat fee plus a charge for every 5,000 gallons of water used. Terry Dolan says that he doesn’t see the rate structure as the problem, but rather that the rates are currently too low to cover costs. Also, he says that a lack of meter standardization makes a per-gallon system for all users unworkable right now.
“In the past, this utility purchased three different types of bases for the water meters and three different heads, where the actual meter that you read [is]…So, we have all these different combinations of bases and meters, and, because of that, the meters don’t read properly.”
Terry Dolan says that the borough has worked out a way to determine actual usage, but that the number that home and business owners see isn’t accurate, and leads to a lack of trust in the meters themselves. Dolan says he doesn’t blame Talkeetnans for not trusting the meters.
If the assessment’s recommended increases go into effect, the annual deficit is projected to gradually drop. The plan does not include the establishment of emergency or replacement funds for the system. Terry Dolan says if there is an emergency with the system, the community will likely have to turn to the borough or other entities for funds.
“I don’t think the community up there is capable of providing, through it’s user fees on this utility, a well-funded emergency fund.”
No borough legislation is currently on the table to change the sewer and water rates. Terry Dolan plans to incorporate those changes into the borough’s budget process. The initial borough budget proposal is scheduled to be released later this month.
