Lodi City Manager Dixon Flynn and Finance Director Jim Krueger hinted Tuesday that another increase in water rates may be needed.
But Mayor Larry Hansen isn't so sure. He pointed out that residents endured an increase in their sewer and water rates less than three months ago. Instead, he is confident insurance settlement money will help cover a shortfall in the city's water fund.
"We need to give it some time," Hansen said of the pending settlement. "I don't think we need to come back in a couple of months with a rate increase. Having just had one myself, I wouldn't be too excited to have another. I don't want to even talk about (a rate increase)."
Krueger mentioned the rate increase in passing when discussing a declining water fund balance at Tuesday's City Council study session. Staff plans to come back for council approval for a fall or spring rate increase, he said.
"It will probably be more like next year," Krueger said following the meeting. "If we're going to be charging the legal costs to this account, there's really no other way to look at it except to raise rates."
Public Works Director Richard Prima is concerned with the water fund. Under the current budget, at the end of next fiscal year, a mere $9,407 will be left in the account.
With a lack of funding, infrastructure replacement has slowed, Prima said.
A rate increase was already imposed earlier this year. The new rates went to replace a $6 million loss to the water fund through costs associated with litigation; earlier this month the council approved spending close to $100,000 to test air levels at potentially contaminated sites. A portion of that money came from the water fund.
In 2000, Lodi sued more than a dozen local businesses, including the News-Sentinel, in an attempt to force the businesses' insurance companies to pay for the clean up of groundwater contamination. There have been several countersuits and now more than 100 parties are involved.
The city hopes USF&G, its insurance company, will pay for a portion of the litigation and ensuing cleanup costs. Officials are also working on settlements.
"The big unknown is the insurance companies. Will they repay us?" Flynn told council members at Tuesday's meeting. "If we get insurance settlements, there is no need for a rate increase. If we don't … "
Early estimates for a rate increase could be $2 per month, per household, Flynn said.
In April, 734 residents filed formal protests to the latest increase. Before that, rates had not been increased since 2001.
"I'm not happy about it at all," Cheryl Nitschke, of Lodi, said when told of the potential increase. "They expect the people to pay for it. They're going to price us right out of Lodi if they keep up with all of these rate increases. When they settle this thing are they going to stop the $2?"
Resident Robert Emmer, who filed a formal opposition earlier this year, said Tuesday he was against another increase - especially if it is related to the contamination suit.
"I think that has been poorly managed," he said.
The City Council will continue budget discussions at its meeting at 7 a.m. Tuesday in Carnegie Forum, 305 W. Pine St. Adoption of the 2004-05 budget has been scheduled for July 21.