The borough’s water fund expenses overtook revenues in fiscal year 2019, for the first time in eight years. Expenses haven’t dropped since. Graph made by borough chief fiscal officer Jila Stuart.

The Haines Borough Assembly introduced an ordinance that would raise water and sewer rates by 5% each year for the next four years, starting in July.

Borough staff proposed the rate hike earlier this month to compensate for state funding cuts and a sharp rise in water fund expenses over the last four years. The Finance Committee voted unanimously on Feb. 17 to forward staff’s proposal to the assembly.

In recent years, water and sewer fund expenses have risen above revenues. In the current fiscal year, the water fund spending is expected to exceed revenue by $47,214 and sewer fund expenses to outpace revenues by $34,414.

Water fund expenses increased 42% in FY19; sewer fund expenses climbed 23% between FY18 and FY20. In 2017, the state Department of Conservation eliminated a grant program that provided funding for 70% of municipal water and sewer projects. Loss of water sales to cruise ships during the pandemic also has hurt the funds.

Meanwhile, the borough’s water and sewer infrastructure is aging and requires constant maintenance and repair, according to borough staff.

“The most significant increase in expense in the water fund is for debt service on loans,” borough chief fiscal officer Jila Stuart wrote in a memo to the assembly. The borough borrowed $1.3 million from DEC for a major project to replace asbestos cement and pipes last fall, adding $81,000 in debt service per year.

“Looking forward, the most significant increase in the sewer fund expense is the debt service for capital projects including the Wastewater Treatment Plant Electrical Upgrades, Pump Station Upgrades, and Sewer Master Plan. These projects will add an additional $37,000 per year in debt service,” Stuart said. “In addition to the increased debt service, we are also budgeting more for other operating costs including repairs & maintenance, professional services, insurance, utilities, and payroll.”

The current monthly residential flat rate for water and sewer is $91.20. If the assembly adopts the proposed rate schedule, the residential flat rate would jump to $95.75 in July, then $100.55 a year later, $105.55 the year after that, and finally $110.80 in 2025.

Compared to other Southeast communities, Haines residents already pay high water and sewer bills. Skagway’s residential water rate is $72.93 every three months and $39.72 for sewer. That comes out to a combined flat rate of $37.55 per month. Petersburg residents pay $75.71 for water and sewer each month. And in Wrangell, the residential rate for water and sewer is $87.89 a month.

The borough’s sewer fund expenses rose sharply over the last two years as revenue stayed flat. State funding dried up in 2017, despite the borough’s continued need for maintenance and repair projects. Graph made by borough chief fiscal officer Jila Stuart.

In addition to a general rate hike, the proposed ordinance would raise the cost for non-conforming unmetered commercial buildings (of which there are few) slightly above the metered commercial rate, which covers up to 5,000 gallons of water. It also would make the cost for multi-dwelling units slightly lower than the single residential flat-rate. The intent for both changes is to spread the cost burden evenly across customers.

The ordinance will head to two public hearings, on March 8 and March 22, before the assembly votes on it.

The borough provides water to about 850 units. Six hundred and eighty six of those customers are residential, and the rest are commercial.

The borough doesn’t have data on how much total water it supplies customers because residential units don’t have meters.

Staff said installing meters – which would require extra labor and equipment – likely is cost prohibitive at the moment.