ATWATER -- The City Council started laying the groundwork for large utility rate increases during Monday's meeting in an effort to correct one of the city's upside-down enterprise funds.
A treasurer's report for August shows the city's combined water funds are $1.5 million in the hole, and the sanitation fund has a negative balance of $1.3 million. Both deficits have contributed to the city's financial crisis, which could result in dozens of layoffs and even bankruptcy.
The public pays fees into enterprise funds, which ideally would allow the services they provide to be self-sufficient.
The council voted 4-0 for an option Monday night that will increase water rates by 150 percent for typical users over five years. The move is a hybrid of two proposed options, one that would have doubled rates over five years and another that would have quadrupled rates for typical users over the same time period.
Councilman Gary Frago was absent from the meeting.
Frank Pietro, police chief and interim city manager, said he was taken to Emanuel Medical Center after suffering chest pains and had three stents put in. He should be released within a day, Pietro said.
The high rate increases, which staff worked out with Raftelis Financial Consultants, are aimed at eliminating the water fund deficit, making the fund sustainable and allowing for reasonable water system work and replacement.
Possible increases are still months away.
Notices must be sent to property owners, who have the option of protesting the increases. If more than 50 percent protest, the rate hike would be rejected.
If the process goes as planned, a public hearing on the item would be held in December and the first increase could become effective as early as Feb. 1.
If the rate hikes go through, it would be the first time the fund's fee structure has been increased since 1992.
Typical residential users pay $15.65 a month for water, while metered customers using 100,000 gallons a month pay $53.15.
As proposed, rates for typical users will be increased by 40 percent in February. Additional increases of 15 percent each would continue through 2017. In comparison with cities in neighboring counties, the change will bring Atwater to the middle of the pack in terms of water rates.
A general fund deficit of more than $3 million coupled with the deficits in the two enterprise funds has pushed Atwater toward the edge of a financial cliff.
Last week, management confirmed 14 employees were given pink slips that become effective Oct. 29. Twenty-four employees received letters the next day, notifying them that they could be laid off as the city tries to balance its budget.
Other workers could be facing cuts in pay.
Atwater Police Officers' Association employees are considering a 22 percent pay cut that would help ease the city's budget crisis.
During a special meeting last week, the council declared a common-law fiscal emergency, giving the city more flexibility to negotiate with contracted employees. An Assembly Bill 506 fiscal emergency, which is a precursor to bankruptcy, was carried over to an Oct. 22 meeting.
Reporter Mike North can be reached at (209) 385-2453 or mnorth@mercedsunstar.com.
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