To keep pace with inflation and ensure its ability to cover future costs, the borough is considering rate increases across all enterprise funds — electric, water, port and harbors, wastewater and garbage. If the proposals are adopted, rates for the self-supporting funds would increase an average of 10%, effective with the start of the new fiscal year in July.
The borough assembly will consider the rates at its March 28 meeting.
The 15% wastewater rate increase would be the steepest rate hike; the 5.5% increase for trash pickup services would be the lowest.
The rate adjustments were proposed at a work session March 14, when assembly members met with Finance Director Mason Villarma to discuss the borough’s financial sustainability. The goal of the hikes, he explained, is not to profit the borough but to ensure that it can continue providing essential services.
“The key of all this is sustainability,” said Villarma. “How do we get each of these enterprise funds sustainable for the next 40 years, the next 100 years, passing off the torch a little better than we received it.”
Last year, the borough assembly instituted an annual review of its rates and fees. In past years, rates did not keep pace with inflation, leaving the funds insufficient to replace or repair aging infrastructure, like vacuum trucks, utility poles and the water treatment plant.
The purpose of the review is to help the borough cover its costs, decrease its reliance on federal aid and bolster its ability to afford repayment on bonds for possible major repair, rebuilding or construction in the future.
Since major improvements are needed at the wastewater utility, the fund has the highest proposed rate increase, at 15%. Residential users’ monthly payments would go from $49.30 to $56.70, for an annual boost of $88.74.
Three costly projects are driving the proposed rate increase. The borough needs to update sewage lift stations on Shoemaker Loop and prepare to install wastewater utilities at the former Wrangell Institute property, which the borough plans to redevelop as the Alder Top Village (Keishangita.’aan) subdivision.
In addition, to comply with new federal requirements, the borough must add a disinfection step to its wastewater treatment processes. Current estimates place the project at around $5 million.
“This (rate) increase gets us to be able to afford these capital expenditures,” said Villarma. It would also better prepare the Public Works Department to handle emergency costs, like sewage line breaks.
The Port and Harbors fund is “the worst in terms of depreciation,” Villarma said. Though Wrangell’s port and harbors generate significant net income, the cost of repairing or replacing aging facilities vastly outpaces that income, forcing the borough to rely on uncertain federal funding.
“We’ve got to get closer to being somewhat financially independent from the state and feds. When is the faucet going to get shut off? That’s what scares me,” Villarma told the assembly.
Since achieving sustainability for the fund appears unlikely in the short term, he hopes to generate enough net income to handle debt service and prepare for unforeseen circumstances. “If the travel lifts go down, one or two of them in the next five years … we’ve got to have sufficient reserves to go buy them again. We can’t just shut down. That’s the bread and butter of the whole operation.”
Under the proposed 11.1% harbor rate increase, a 58-foot stall rent would increase $270 yearly, from $2,434 to $2,704. The Port Commission approved the proposal at its March 10 meeting, sending the new rates to the assembly for its consideration.
“The water fund is our worst performing enterprise fund and the biggest one that worries me in the future,” said Villarma. The water fund is also facing expensive upcoming projects, such as the water treatment plant upgrades, reservoir dam stabilization project and likelihood of repairs to aging water lines.
Under the proposal, residential users would pay $67.43 monthly, up from the current $61.30 rate. The annual increase would total $73.56.
The proposed electricity rate hike would be one cent per kilowatt hour, about an 8.5% increase for most residential users and about 7.5% for most businesses.
The 5.5% proposed rate hike for garbage pickup would add $32.74 to the annual cost for residences, allowing the fund to keep pace with inflation and contribute to the upcoming loading dock project at the trash station and the purchase of a new garbage truck.
“Mathematically, I understand all of this,” said Mayor Patty Gilbert. “And I know it needs to be done. But emotionally, it’s tearing at my heartstrings because I know we’ve all experienced this massive inflation and I don’t see it getting better any time soon.”
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