King George will be getting a Dunkin’ Donuts in Dahlgren on the vacant parcel next to
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King George will be getting a Dunkin’ Donuts in Dahlgren on the vacant parcel next to
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Current rate structure to be maintained
The King George Service Authority held several budget work sessions in February and March, with tentative agreement on a proposed budget and a 5 percent rate hike proposed to take effect with the July billing.
The proposed 2013-14 budget, presented by Chris Thomas, general manager for the Service Authority, did not include salary increases, but it did indicate a small surplus of about $54,000 which had been suggested could be transferred from the operating budget to the Service Authority’s capital budget.
Following scrutiny of budget figures, board members reached consensus on the bulk of the budget. But at the same time, they were interested in adding a 1 percent pay increase for employees.
Over those same weeks of meetings, budget sessions were also ongoing on the county budget. In their roles as members of the county Board of Supervisors, governing officials are proposing a 1 percent salary increase for county employees for the upcoming fiscal year.
It now appears likely that the Authority board will favorably entertain a proposed Service Authority budget for approval that is expected to contain 1 percent raises for its employees. A final proposed budget will be presented to the Authority board, with adoption expected likely in May or June. The raises would be covered by any remainder in the original $54,000 balancing figure, along with some other budget corrections and adjustments.
PROPOSED INCREASES, BUDGET
The 2013-14 Service Authority’s proposed budget of $4,430,608 is predicated on rate increases of 5 percent, along with a similar percentage hike in charges for debt service and for new connection fees. The rate and fee increases are proposed to be reflected in the July billing.
The increases would cover higher costs due to a 1 percent hike by the state in Virginia Retirement System (VRS) costs along with a 10.5 percent increase in health insurance. The rate increase also reflects higher costs for chemicals used for testing and treatment, fuel for vehicles, and the other rising costs of doing business.
The board authorized advertisement of a rate increase this summer, with a public hearing set to take comment on that proposal on May 21.
The proposed increase also includes an increase from $100 to $250 in the deposit to be collected from new customers. In addition, connection fees for new customers will also go up. Those for new residential customers are proposed to increase from the current connection charges for both water and sewer of $18,901 to $19,845.
PROPOSED RATES FOR 2013-14
Residential bills for customers with both water and sewer service using up to 5,000 gallons per two-month billing period would go up by $5.59 every two months. That minimum bi-monthly bill for water and sewer would go from $112.62 to $118.21. An ‘average’ bi-monthly residential bill for both water and sewer service would go from $166.75 to $175.09. That ‘average bill’ is based on a usage of 9,000 gallons over a two-month billing period.
WATER The usage rates for water would increase by 20-cents per each 1,000 gallons. That means that rates would go from $4.06 to$4.26 per 1,000 gallons. For customers who use up to 5,000-gallon during each two-month use and billing cycle, the charge for water would go from $20.30 for water-only charges to $21.30. Added to that, the flat fee for debt service for water would go from $17.36 to $18.23. That would make the total minimum bill for water-only customers every two months for up to 5,000 gallons from $37.65 to $39.53.
SEWER The usage rates for sewer would go from $9.47 to $9.94 per 1,000 gallons. The flat fee for debt service for sewer is going up from $27.60 to $28.98. The increases result in two-month bills going from $74.95 to $78.68 for 5000 gallon minimum usage of 5,000 for the few customers with sewer-only service.
TIERED RATES CONSIDERED, NIXED
The current rate structure follows a plan put into place four years ago. It was devised by Davenport & Associates to include gradual annual increases in water and sewer rates and fees, along with debt restructuring to save money on interest payments. The idea is to get the Service Authority self sufficient. And that appears to be working.
But Dahlgren Supervisor Ruby Brabo last year led a charge to change the way water and sewer customers are charged as part of her agenda for her first year in elected office.
Brabo and some customers view the current rate structure as unfair. That’s because sewer usage is based on the amount of water used be each customer. Only water usage is metered, with sewer usage based on the water meter reading. That means that sewer charges include the water used for such optional activities as filling swimming pools, washing cars, and watering lawns and gardens.
Brabo instead wanted a tiered system that would charge higher rates for those using more water without charging at 100 percent on their sewer usage, based on water metering.
At her urging, a study was performed at county expense last year by Municipal & Financial Services Group (MFSG). It included an in-depth analysis and comparison of the King George rate structure with those in other similarly-sized localities and offered other rate structures that might also work. Brabo preferred the tiered structure offered as a potential substitute.
The Service Authority board agreed last spring to hold off for a year and to continue using the existing rate structure for the coming year, with a proposed model to be run and studied side-by-side to compare its revenue with the actual revenue collected. The board wanted to ensure that switching to a new rate structure would fit the King George Service Authority system and would generate enough money to cover expenditures, if put into place.
That was done, but it didn’t indicate the desire result. In fact, it did the opposite.
Thomas explained the results at two meetings and provided examples that indicated that about 60 percent of customers in the middle usage tier would see a 20-percent increase in their bills, while for others, bills were only slightly higher.
At the same time, bills would go down significantly for customers who use more water, with cuts in their bills upwards of 17 percent to 27.5 percent.
When the results were provided at the first work session on Feb. 28, Brabo and others on the board were somewhat surprised that the tiered structure didn’t work for the King George model. But there was no dissent on the fact that it was a useful analysis and good comparison to seriously consider.
Brabo stated, “I was hoping it would work.” Joe Grzeika agreed, and pointed to the example provided them of the Caroline billing structure, noting, “The lower user there pays more than the higher user.” He added, “I think we’re going to have to stay with the structure we have.”
Brabo agreed. She added, “At least they understand that we care about their concerns,” with Grzeika telling her, “We always cared.”
SERVICE AUTHORITY FACTS
The King George Service Authority is a small enterprise that owns and operates 12 water systems and five wastewater systems in specific areas of the county. It does not benefit from the economies of scale advantages provided to larger systems.
As of last June 30, according to statistical information contained in the annual audit, there were 3,862 water customers, with fewer than half of those with water-only service.
The 2011-12 audit also indicates 2,090 sewer customers, only a few sewer-only customers. It was formed in 1992 when the county’s separate sanitary systems were united. At the same time, private water systems were purchased to meet the demands of state regulations on localities for Virginia’s evolving standards required for community water systems.
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