The Payson Town Council last week approved a roughly 24% water rate increase phased in over the next four years that will hit second-homeowners and low-income residents especially hard.
The council knew it needed more money to upgrade the town’s aging water system, but debated how to spread out the pain at its June 10 meeting.
The council opted for a rate structure that will boost the base rate no matter how much water you use, rather than a rate structure that would rely mostly on how much water homeowners and businesses actually used. A rate structure based on volume encourages water conservation, but a structure that stresses the base rate produces more predictable income.
In March, Tanner Henry, the director of the Payson Water Department, briefed the council on the sorry state of the water mains in town. At this June meeting, he presented the council with a piece of 30-year-old pipe.
“If you notice, the walls are typically thin,” he said as he picked up a piece of newer pipe, “The kind we put in now has a thicker wall.”
He reminded the council the water department has had a few water main breaks in the last few years, which will get worse unless the town updates the system.
The water department plans to increase spending on capital improvements from $1 million up to $3 million per year to catch up on repairs set aside while they built the C.C. Cragin pipeline.
The six council members present (Scott Nossek did not attend), considered two alternative rate structures — one with a higher base rate and one with higher rates the more water you use. They opted for the higher monthly base rate.
The average Payson water user’s bill will go from $55 per month to $68 per month when the new rate is phased in by 2024. The average Payson customer uses about 4,000 gallons per month.
That works out to a roughly 6% increase each year, starting in October.
Vice Mayor Chris Higgins strongly favored the high base rate, rather than emphasizing water use. “I really like the alternative one,” he said, “It is a more reliable income stream. It is a more fair and equitable rate increase. You would have everybody in the community, a low or higher user, contributing to a rate increase.”
The town’s water rate consultant noted the higher base rate produces a more predictable budget. The base rate will go from about $43 a month to $55 per month over the course of four years — which covers the first 2,000 gallons used. That’s a 28% increase in the base rate. The water-use rates will also rise — going from $5.84 per 1,000 gallons (between 3,000 and 5,000 gallons) to $7.23 per 1,000.
The council rejected the alternative plan — which would have kept the base rate consistent but charged almost $10 per 1,000 gallons.
At one time, the town had some of the strictest water conservation statutes in the state. However, completion of the $54 million C.C. Cragin pipeline project boosted the town’s long-term water supply from about 1,800 acre-feet to 4,800 acre-feet — more than enough water to support about three times the present population. The project shifted the emphasis from conserving water to putting that water to use.
Payson must put the pipeline water to “beneficial use” to maintain its rights to the reservoir.
Higgins did recognize a higher monthly charge would be a challenge to lower-income residents because the flat fee will take a proportionately higher percentage of their income than a wealthier resident. Moreover, residents can’t avoid the higher base fee by reducing their water use.
Payson’s poverty rate is about 11% — and half of the families in the Payson school district qualify for free-and-reduced federal lunches based on family income. Those families also have to cope with Payson’s relatively high housing costs.
On the other hand, boosting the base rate means that second-homeowners will face a substantial bill every month — even if they don’t use a drop of water.
Mayor Tom Morrissey asked town staff whether the community has assistance for those struggling to pay.
Henry told him there are a lot of nonprofits in town that offer utility bill assistance.
“Is your experience that this solves the problem?” asked Morrissey.
Henry said yes, and if the bill is outrageous because of a leak, the water department will work with the customer on payments. The department also refers them to the Gila Community Action Program.
However, those community groups typically have limited funds to help people through a crisis rather than offering ongoing assistance.