SitNews: Electric, Water, Wastewater Rate Increases on City Council's Agenda By MARY KAUFFMAN

(SitNews) Ketchikan, Alaska - The Ketchikan City Council will hold a regular meeting on Thursday, January 3rd. Among the agenda items to be considered by the Council will be the 1st Readings of 3 proposed Ordinances that would increase electrical, water, and wastewater rates. If the City Council approves the 1st Readings of these 3 Ordinances, the next step in the process will be for the City Council to schedule a public hearing date and establish effective dates the rate increases would go into effect.

Ketchikan Gateway Borough Sales Taxes

The meeting will be held in the City Council Chambers and is scheduled to begin at 7:00 PM. As always, there is time scheduled for the public to be heard and provide comments at the beginning of the meeting. The public is invited to attend. For the full agenda and detailed information packets, click here.

Ordinances to be heard Thursday in their First Readings are: Ordinance No. 19-1888 proposing to increasing electrical rates by 3.5%; Ordinance No. 19-1889 proposing to increase water rates by 5.5% and proposing to increase seafood processor water rates by 35% (thirty-five percent); and Ordinance No. 19-1887 proposing to increase wastewater rates by 6.0%.

The last time electric rates were raised was in March 2016 and Section 8-1 of the Ketchikan City Charter requires a public hearing on any electric rate increases.

When the City Council adopted the 2019 Ketchikan Public Utilities Operating and Capital Budget in December, the City Council approved appropriations for the Electric Division based. Generally, this ordinance proposes to increase all electric rates by 3.5%, rounded to the nearest penny using the standard rounding convention, but several exceptions were made to simplify customer service and billing . The exceptions are:

According to a transmittal memorandum to the City Council from KPU General Manager Karl R. Amylon:

Ordinance No. 19-1888 (Electric Rate Increases) was prepared by Acting Finance Director Michelle Johansen. Johansen noted that failure to enact the proposed increase will result either in a need to reduce authorized 2019 Electric Division expenditures by $615,000 or to decrease Appropriated Reserves of the KPU Enterprise Fund by an equivalent amount.

If approved by the Ketchikan City Counci in its First Reading Thursday, the next step is for the City Council to set a date for a public hearing and to establish an effective date to implement the increase.

Also to be consider by the City Council this week in its 1st Reading is Ordinance No. 19-1887 which proposed to increae Water Rates by 5.5% and Increase Seafood Processor Water Rates By Thirty-Five Percent (35%). According to the information to be considered by the City Council, failure to enact the proposed increases will result either in a need to reduce authorized 2019 Water Division expenditures by $284,000 or to decrease Appropriated Reserves of the KPU Enterprise Fund by an equivalent amount.

Also, the Council will consider the First Reading of Ordinance No. 19-1887 which proposed to increasing wastewater Rates By Six Percent (6.0%). In adopting the 2019 General Government Operating and Capital Budget, the City Council approved appropriations for the Wastewater Division based on a six percent increase in wastewater rates. This proposed ordinance was prepared by Acting Finance Director Michelle Johansen.

If adopted, wastewater rates would increase effective April 1, 2019. Failure to enact the proposed increase will result either in a need to reduce authorized 2019 Wastewater Division expenditures by $191,000 or to decrease Appropriated Reserves of the Wastewater Services Fund by an equivalent amount. If approved in the first reading by the City Council on Thursday, a public hearing will be set and a effective date established. Proposed effective date is April 1. 2019.

Cost per ERU (Equivalent Residential Unit. ERU is a unit of wastewater measurement). The use charge is calculated by multiplying the total number of ERU's for each user by a constant cost factor. This cost factor is fixed at $52.98 and would be raised to $56.16.

The financial needs of the City’s wastewater utility system through a series of rate increases has deviated from the recommendations of the FCS Group, a consulting firm hired to prepare a cost of service and revenue requirements study. The original study recommended rate increases of 12% annually beginning in 2013 and continuing through 2016. Beginning in 2017, the updated study recommended rate increases of 6% annually for an eight year period. Since the original study, the City has taken the following actions:

2012 -- Recommended By FCS 5% increas - Rate increase 05%
2013 -- Recommended By FCS 12% increase - Rate increase 10%
2014 -- Recommended By FCS 12% increase - Rate increase 04%
2015 -- Recommended By FCS 12% increase - Rate increase 08%
2016 -- Recommended By FCS 12% increase - Rate increase 08%
2017 -- Recommended By FCS 6%- Rate increase 0%
2018 -- Recommended By FCS 6% - Rate increase 6%
2019 -- Recommended By FCS 6% increase

No increases in city property or city sales tax rates have been programmed in the 2019 budget. The city property tax mill rate will remain at the current rate of 6.6 but assessed property values have been programmed to increase by 1.3%. This projection is based on a 5-year average of increases in the assessment roll and will result in a slightly increase in property tax revenues if the mill rate remains at 6.6. The sales tax rate will remain at the current rate of 4% but taxable sales have been projected to increase by 2% over estimated taxable sales for 2018. The increase in sales tax revenues is being driven by record passengers visiting Ketchikan via cruise ship. The decision not to increase the projection for sales tax revenue beyond this amount is due to the uncertainty regarding fuel prices and increasing competition from internet retailers.

Approximately 1,210,000 cruise ship passengers are projected to visit Ketchikan in 2019. This represents a 15% increase over the 1,045,000 passengers that visited Ketchikan in 2018. The revenues and expenses of the Port Enterprise Fund have been programmed accordingly by the City. The biggest financial impact will be on revenues from the City’s $7 passenger wharfage fee and the lease payments that will be required for Berth IV. The additional cruise passengers should also have a favorable impact on sales tax revenues.

In mid-2017, the City’s new 5% marijuana sales tax went into effect. The new tax raised $97,152 in its first year and is expected to raise $150,000 in 2018. The forecast for 2019 is $170,000. As redirected by the City Council, the proceeds from this new revenue source will be accounted for in the Marijuana Sales Tax Fund instead of the General Fund. The proceeds will be used for assisting and addressing the needs of the homeless population in the City of Ketchikan or other humanitarian purposes as determined by the City Council.