AC Council

Cliff WIlliams / The Outlook The Alexander City City Council held a work session Thursday to discuss the fiscal year 2022 budget and utility rate increases.

A balanced budget for fiscal year 2022 will be on the agenda for the Alexander City City Council Monday.

Given years of inaction on utility rates while losing large sums of money in sewer, rate increases will also be considered by the council. To keep the budget balanced, sewer rates, if approved would double Jan. 1, 2022, and go up 7% each year for the next four years. To start Jan. 1 the average sewer bill for 3,935 gallons of sewage would go from $34.95 to $69.90 and by the fifth year be $91.62. Rates would continue to increase after closely mirroring the Consumer Price Index (CPI).

It’s all to cover the cost of providing the service and maintaining the infrastructure and the council discussed it all at a Thursday work session.

“Beginning Aug. 1, 2022, the superintendent shall review rates charged for sanitary sewer service on an annual basis to determine if current or proposed rates are sufficient to provide adequate funding for the operation and maintenance of the sewer system,” the proposed ordinance reads. “Rates charged for sewer services shall be sufficient to fund the total operation and maintenance costs of the sanitary sewer collection city for and on behalf of the sewer system, the total sewer system debt service incurred by the city including principal, interest, coverage and other bond obligations, depreciation and maintenance capital requirements not financed through bond proceeds.”

The ordinance provides for an automatic increase equal to the increase in CPI that closely follows inflation. The ordinance also provides for even larger increases when the proposed five-year schedule concludes.

“If the rates do not cover, it gives the superintendent of utilities the ability to change them based on need to provide adequate funding but not to exceed 7% annually,” city clerk Amanda Thomas said. “If the need is greater than the CPI, the superintendent has the ability to raise no higher than 7% without coming back to the council to make sure the asset is being maintained. All rate adjustments become effective Jan. 1.”

Those increases would begin in 2028. The proposed ordinance would also require a cost of services study every five years.

“At times the superintendent can do nothing and let the CPI take care of the increase,” Thomas said. “At least there is something every year. There may be some years where there is a need to go over CPI. You are putting the responsibility back on the superintendent of utilities which is ultimately his or her responsibility in the first place.”

The city council appoints the superintendent of utilities every four years. As it has been for the last several administrations, the mayor is also superintendent of utilities.

Mayor Woody Baird said he would not blindly increase rates.

“No increases would be enacted without your prior knowledge,” Baird said.

A proposed gas rate ordinance is on the agenda and closely models the sewer except it does not follow CPI. The gas rate ordinance is tied to the cost of natural gas bought on the market.

With the proposed gas rate ordinance, the rate would still put Alexander City mid pack of other Alabama municipalities offering natural gas and would still be cheaper than propane.

“We would like to do it with water and electric the same way,” Thomas said.

There isn’t a dire need in electric and water yet, so city leaders have concentrated their efforts in sewer.

Councilmembers were slightly concerned about not being able to gain control of issues if they got out of hand.

“The way you would address it is the council by resolution appoints the superintendent of utilities. It is a four-year term,” Thomas said. “Right now, the mayor is the superintendent of utilities. Ultimately that is the responsibility of the superintendent to manage that.”

Councilmembers like the idea of being hands off when it involves rates.

“I do think this takes the political aspect out of it at this point,” councilmember Scott Hardy said. “Because no matter what, whoever is in that position is responsible for the well-being of our utilities.”

Citizens are protected in several ways.

“You still approve the budget,” Thomas told the council. “There are still checks and balances there.”

City finance director Romy Stamps said the 7% cap was put in the proposed ordinance to protect citizens as well.

Rate increases will allow needs to be addressed in utilities

Even doubling the sewer rate Jan. 1, sewer will still lose money until it gets to year five. In that time, more customers will be added to service, lowering the cost per customer.

One line will go to the industrial park in Coosa County for the granite processing project. Estimates put costs at $11.3 million but nearly half of the project is covered in grants and tax credits. $6 million of the project would be paid for through a loan from the state’s revolving fund.

A sewer line will be constructed bringing in Wicker Point at an estimated cost of $10.5 million. Some costs for the project will be covered through grants and other revenue. Russell Lands has told city officials it will contribute $500,000 to the project. ADECA has said it will provide a $500,000 grant requiring a $100,000 match from the city. City officials said they have a commitment from the Tallapoosa County Commission to provide $1.5 million from the county’s American Rescue Plan funds leaving $8 million to come from the state’s revolving fund.

Baird said the city would be paying only 2% interest on the revolving fund loans, but those funds can only be spent in limited ways. Payments for the Coosa County line would be $365,000 per for 20 years and $485,000 for the Wicker Point.

“I think we would be able to pay down those faster as those projects come online,” Baird said.

The mayor said Wind Creek State Park is interested in tapping into the Wicker Point line providing revenue before the project is completed and allowing paying down the debt to the revolving loan fund.

Baird said because the way Wicker Point was annexed the city would be able to charge an impact fee as lots were sold.

“Because of where it's at and the distance we have to run the line, we are going to have a special access fee,” Baird said. “We hope they build into the price of the lot. As soon as they sell that lot, we will get that money.”

Budget will be balanced

To get to a balanced budget, many cuts were made.

For example, in 2020 $40,000 was spent on fuel for ambulances in the Alexander City Fire Department. For fiscal year 2022, only $18,000 is budgeted. The savings comes in cutting back on how far the ambulances will transfer patients.

“We set a 100-mile radius,” Baird said. “We were transporting people to Dothan, Mobile and further. We can’t do that anymore. We set it at 100 miles except for life-saving situations.”

Other ways were cut too. The city appropriates funds for the Lake Martin Area Economic Development Alliance. The city cut $15,000 while Tallapoosa County increased its funding so that both are contributing the same amount.

“We were giving $35,000 more than the county,” Baird said. “This makes it so we are both giving the same.”

Cuts were made across the board for other appropriations to the tune of 25%.

Council president Buffy Colvin said she saw the Alexander City Chamber of Commerce appeared to be cut by 40% but Baird said a closer look says no.

“They were getting $22,000 per year for Retail Strategies,” Baird said. “That was a three-year contract that ended last year. They actually got $22,000 after the contract. When you take that out, they were cut about 25%.”

There was talk about pushing more funds to tourism and allowing the Lake Martin Tourism Association to deal with the appropriations.

“It remains the same,” Stamps said. “We elected not to put the burden on tourism this year. We will do it.”

Last year the council asked for accountability in the appropriations wanting to see how taxpayers’ monies were spent and how the agencies provided other funding. Councilmembers also wanted to see the funds spent within Alexander City as much as possible. Stamps said it is still in the works to get the accountability and have tourism handle the task.

“First we want to iron everything out,” Stamps said. “We want to make sure our city people get their fair share as well as tourism continues to fulfill their mission. I also want to make sure that we get the documentation we require.”

Councilmember Jimmy Keel said only one agency provided the accountability measures and wants to see the other agencies do the same.

“I noticed Main Street had an itemized count of every dime of every cent they spent, check numbers and everything,” Keel said. “We need a resolution. The council is responsible for the funds we appropriate.”

The budget includes about $100,00 in savings from 11 employees who are taking advantage of the one-time retirement buyout. All but three positions will be backfilled, but the savings are still there.

The entire proposed general fund budget is just shy of $25 million down from $26.3 million in 2021.

The entire proposed utility budget is about $29.5 million up from $25 million in 2021. It includes transfers to the general fund.

No borrowing money

Currently the city isn’t in a position to borrow money thanks to audits still being behind. Stamps said auditors are supposed to be in this week to finish up fiscal year 2019.

Until audits are complete, the city cannot get a bond rating and borrowing money is impossible at reasonable rates according to Baird.

Cliff Williams is a staff writer for Tallapoosa Publishers.

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