The ordinance was approved by a 4-3 vote with Councilmen Bill Estes, David May, Dale Hughes and Vice Mayor Avery Johnson in favor, while Councilmen George Poe, Richard Banks and Charlie McKenzie were opposed. The fiscal year 2012 budget takes effect Friday.
Mayor Tom Rowland said he will not veto the decision.
Poe continued Monday in his effort to force Cleveland Utilities into accepting a budget with no pay raises or rate increases. He said the public utility should go through the same process as city department heads who cut budgets to the bare bones. Then the City Council cut an additional $4.4 million in order to maintain the property tax rate at $1.4904 per $100 of assessed value.
Prior to the vote, Mayor Tom Rowland said he respected Poe’s position because he has been with the at-large councilman many times when he has received phone calls and personal visits from people who cannot pay their taxes or utility bills. On the other hand, the mayor said CU needs the revenue.
“We’ve got good points on both sides of this issue,” Rowland said.
Banks said during the discussion Public Works is begging for more money for roads and equipment at the same time the number of police patrol cars was reduced.
“Everyone knows we’ve got a $1.8 million hole to fill over the next two years for the fire department,” Banks said. “With all that said, I think the general public will realize we may be in a holding pattern for a year and brighter times are ahead.”
Rowland asked CU General Manager Tom Wheeler if the utility could live a year with no water and sewer rate increases.
“We’d go back and do everything we could to make it work. That’s just the way we operate. We’ll accept whatever decision you make and we’ll do our best to make it work,” Wheeler said.
Council members were presented with four options. None of the options included a pay raise for CU employees. However, rate increases ranged from zero to a 6 percent increase in water and 5 percent increase in sewer. Three of the four options included a 1 percent pass through from Hiwassee Utility District.
Poe made a motion to accept the option with no increase and no pass through.
Estes made a substitute motion to accept the option that was accepted.
May asked Wheeler to explain the importance of a third 20-inch water main into the city.
Wheeler said the water main is important if the utility is to keep ahead of substantial growth expected over the next 15 to 20 years. The most important issue right now is reliability of the two existing lines and associated equipment. The lines are old and occasionally leak, pumps go down and there is a need for redundancy to ensure the town has water. The rate increase could be delayed one year without annexation of more property into the city.
“If you don’t pass some kind of rate increase for water and sewer, I would beg you not to do anymore annexation,” he said. “If you go back over the past 20 to 25 years of our water and sewer rates, we’ve probably increased water and sewer rates around 100 percent. My estimate would be 50 percent of the rate for water and sewer is annexations.”
He said annexation is good for the city because it brings revenue, but it is the exact opposite for a utility. In many existing subdivisions, it costs the utility up to $30,000 to provide sewer to each lot, which will never generate enough revenue to repay the investment.
“When you are voting for annexation, you are voting for a rate increase,” he said.
The general manager said the utility has avoided layoffs, but without a rate increase in water and sewer, it cannot cut $550,000 without letting people go.
“We can’t do it (make cuts) through capital projects to get to the $550,000,” he said. “I don’t know how we’re going to do it without getting into people. Not a lot of people, but some people.”
Water Division Manager Craig Mullinax said water and sewer are under stringent state and federal environmental requirements. Included in the budget is a project to insert slip lining into old clay pipes to reduce the inflow and infiltration which results in overflows.
“We’re doing maintenance on old lines. We have about 110 miles of old clay sewer lines that are anywhere from 75 to 100 years old,” Mullinax said. “The lines leak and in heavy rainfalls the lines fill up. We’re continually trying to put out the fires with the overflows and this year has been extremely wet.”
He said exceeding five overflows at any single point within a 12-month period will result in a self-imposed moratorium on sewer hookups. There is a moratorium on Wildwood Avenue, but the problem that brought it about has been fixed. The utility has asked the state to lift the ban.
“There are some key places that could cause us some big problems in the city of Cleveland if we can’t aggressively and actively show the state and EPA we’re willing to spend the money to repair these lines,” Mullinax said. “That’s the biggest burden I see.”