It is that time of year again.
Humboldt's City Council held their first budget meeting of the year on January 7.
During the meeting, the biggest discussion was about planning for water and sewer infrastructure, explained Steve Brown, Director of Finance.
Council approved an increase in water and sewer rates in principle, Brown said.
"I guess the biggest thing is we started off here with a five-year plan for utilities," said Brown. "It is the first time in the City's history they have a five-year outlook, for not just capital but for operational."
The five-year plan, which came partially out of an Asset Management Plan done for the City a couple of years ago, will help plan out what the expenses will be over the next few years.
"The big perks out of that, when you start being proactive, it is like changing the oil in your car," said Brown. "You know it is cheaper to do it now than it is when your engine goes."
The biggest issue the City is dealing with is infrastructure replacements.
"We have a substantial amount of money that is needed to replace the water and sewer, so as opposed to doing this reactively, we are doing a proactive five-year plan," said Brown.
He explained they plan to find the money now before the infrastructure actually falls apart. It will be cheaper in the long run to start planning now, not only for replacing the infrastructure, but also for booking in contractors.
"Even by getting the tenders out here in the next four weeks, we will safe five to 10 per cent on the tendering cost just because we'll get to the contractors before they get busy," Brown said. "Once they are busy, the prices go up."
The five-year plan Brown presented to Council proposed a nine per cent increase in the water and sewer rates, plus a small increase for the storm water levy.
"Then in the midst of these whole five years, we are looking at about $9.7 million in renewals and upgrades," said Brown. "Some of that increase is to fund debt. I realize, even within this five year window, we can't come back to people and say we have to (implement) a 35 to 40 per cent increase to fund a $2 million project. That is what financing is for."
He explained if they finance it and spread it out over a 30-year period, much like they did with the super pipe project last year, paying for the service will not just fall on the shoulders of people currently living in the city.
"Council didn't want the current generation paying for the entire cost of that super pipe," said Brown. "Some of these upgrades are what is classified as generational projects in that one generation will benefit from it, but another generation will benefit from it as well. So part of the borrowing will be spread out over a longer period of time."
Although he has proposed a nine per cent increase, Brown understands citizens will not be happy about the increase if it is approved.
"No one likes an increase, no one likes their bills going up," Brown said.
Humboldt isn't the only community proposing a higher than normal increase, Brown stated. Regina has been doing a nine per cent increase since 2008 and anticipate the trend of nine per cent will continue in the future.
"It is better to start hitting in small doses right now," said Brown. "People can budget for small doses as opposed to going 45 to 50 per cent in an 18-month period."
Brown said there was a community that had their infrastructure fall apart within a span of 18 months. The bills of the citizens went from $45 to $160 per month.
"There were people who lost access to water because they couldn't pay, because it was such an impact on their budget, they couldn't plan for it," Brown explained. "The impact here, is to build up the revenue line so we don't go out and ask for a 45 to 50 per cent increase because, for example, six blocks worth of waterline collapsed."
By increasing the rates by about nine per cent over the next five years, at the end of the five years they should be up by 45 to 50 per cent, giving people the chance to budget properly.
Although it may seem like a huge jump, Brown explained a bill of about $100 will go up to about $150 in five years, which is comparable to other services, like power, cellphone, television and gas.
"The question you have to ask is what is more critical - water or cellphone?" explained Brown.
He also mentioned the price of water and sewer per month will still be less than what a person would pay if they bought water retail.
"You look at what you are paying in the store for a jug of water, for a litre of water, you pay about $1.50," said Brown. "You think about what you are paying for, big gallons of water, it is a fraction of retail, for the same kind of quality water."
Clean water is an important part of infrastructure for Humboldt citizens.
"A lot of our water pipes right now, we are living on borrowed time," said Brown. "They are past their useful life. A lot of the watermain breaks in the city are in a predefined area, which usually correlates to where we plan to be replacing."
He explained it is important the City plan for these replacements.
"It is pretty mission-critical that we start going this route," said Brown. "If you ask any of the communities around the province that have been without water for days, or look at the city of Prince Albert who had clean, potable water gone for two months, and you ask those people how important the water was, (they will say) it is a critical item."
Although council approved a rate increase in principle, there are two options Brown gave for an increase.
The first option is the nine per cent increase and the second is a reduced rate structure with a seven per cent increase, making up the difference by taking money from the gas tax fund from the provincial government.
The second option may make a significant difference in the rate increase, but it would take money away from road infrastructure work.
"It again comes back to the issue of priorities - do people value safe roads to drive on or clean potable water?" asked Brown.
And with the new financial management plan the City has implemented, users will be able to understand their water usage better.
"Users can more easily read their bills and understand their water consumption, know exactly what fees are being charged where, so they have a better understanding of where their dollars are going," said Jennifer Brooks, Director of Communications and Community Development.
The new system gives citizens the ability to start tracking month-over-month consumption, see how they can conserve more water and seeing where the efficiencies are, explained Brown.
Council will be continuing budget talks at a second budget meeting on January 21.
