By Katherine Stach
University of Kentucky School of Journalism and Media
The city’s proposed budget for the fiscal year that begins July 1 includes a 13 percent increase in retail water rates due to Kentucky American Water’s request for a wholesale rate increase, pending at the state Public Service Commission.
Mayor Grayson Vandegrift said at the City Council’s first budget workshop Wednesday night that while he hopes Kentucky American’s rate increase won’t pass, he said it is necessary to build this increase into the budget in the event that it does.
Kentucky American is seeking a rate increase in part to pay for infrastructure improvements; mainly a $15 million filtration building that is under construction.
The water increase application was filed at the end of January. PSC spokesman Andrew Melnykovych said applications can take anywhere from 6 to 10 months to process and go into effect, meaning that if approved, the water increase rate could take place as early as the end of July, or as late as November 2016.
The cost increase associated with the maintenance and upgrade has not been offset by the additional revenue produced by the increase in rates from the October 2013 case, Melnykovych said.
According to the application, “Its existing rates for water service do not afford Kentucky American Water the opportunity to recover its reasonable operating costs or to earn a just and reasonable rate of return on its investment.”
In the larger budget picture, with the city’s expected revenue going up 12.4 percent, mainly from occupational taxes on higher employment, it will have more money to spend on things like repaving Northside Drive, which runs from the Midway Grocery to Northside Elementary School.
This year’s budget will call for $80,000 for street paving. Vandegrift said he expects that around $55,000 of this fund will go for Northside Drive, a road that is frequently traveled by buses and school children.
Council Member Bruce Southworth suggested using this fund to repave Stephens Street. He said it is in poor condition, and estimated the repaving could cost up to $46,000.
Vandegrift agreed that Stephens Street was a concern, but said they might not be able to find the money to complete both this year. In response, Southworth suggested using whatever remains from the $80,000 for Stephens Street. However, there was a question as to what length of Stephens could be repaired with the remaining funds.
“I don’t think they’re going to get all of Stephens done for $25,000,” said Council Member Libby Warfield, who suggested that part of it could be repaved.
Midway will also focus on sidewalk repair over the next fiscal year, with Vandegrift proposing to spend $27,000, up form $10,000 last year. Dangerous sidewalks in the city have been a concern for the council.
“We really need to make some significant progress on sidewalk issues,” Vandegrift said.
Vandegrift said he originally wanted to budget $40,000 for sidewalks, but had to cut that amount in order to budget money in other areas.
The mayor is asking that the street equipment fund go from $14,800 to $24,000, mainly due to the city’s expected purchase of a new pick-up truck for maintenance.
This year’s budget is also calling for an increase in computer expenses, to $15,000 from $10,000, to pay for a computer technical operator and new equipment.
“The computer technician has to come often, and he is not cheap,” City Clerk–Treasurer Phyllis Hudson said.
New to this year’s budget is the mayor’s call for $10,000 for Walter Bradley Park improvements. Although suggestions have been made for particular park improvements, Vandegrift is unsure how the money will be spent. But he says improvements to the park are important, no matter what form they come.
“There are a number of things that I am willing to bend on this budget, this simply is not one of them,” Vandegrift said. Council members did not comment.
In the current fiscal year, the city’s contingency fund or surplus was budgeted at $252,494. For next year, the fund has been budgeted for $246,554.
Midway had had a similar surplus for several years. “In a truly balanced budget, there would be no need for a contingency line,” said Vandegrift. “I would love it if we could get to a point where we don’t have a contingency line.”