At the regular meeting of Milford City Council, a sewage rate hike of $0.07 per 1,000 gallons was passed by a vote of seven to one. The purpose of the rate hike is to cover payments to Kent County on a sewer bypass project designed to reduce the risk of ruptured lines that could cause sewage to spill into the Mispillion River. There was such a break several years ago, which prompted the city to enter into an agreement with Kent County to enter into a USDA bond bill for the bypass line.
“My only question is when is it time to tap into our reserves rather than pass the cost along to our citizens?” Councilman Dirk Gleysteen asked. He explained that he understood the need for this small increase to cover the project, but thinks it is time for the council to have a meaningful discussion about how much money in reserves is too much.
Councilman Skip Pikus explained that there was just over $3 million in sewer reserves at the present time, and that removing enough to pay this debt would seriously deplete the account.
“If there is ever a sewer emergency, we would be ill equipped to handle it if we depleted our reserves that much,” Pikus explained.
“I feel as if we are passing too many of these rate increases on to our citizens, and even small increases such seem unnecessary,” said Councilman Steve Johnson, who cast the only dissenting vote. “I think Councilman Gleysteen is correct and that we need to look at our reserves more closely before we pass on costs such as this to the citizens of Milford.”
City Manager Richard Carmean explained that the rate, although small, was enough to cover the cost of the USDA loan payments, and reminded council that city electric rates were lowered recently. In addition, Carmean pointed out that the city currently has an excellent credit rating due to outstanding financial management.
“One thing we must remember is that our credit rating is based on our reserves,” Councilman Pikus explained. “If we have a major emergency and must go to the bond market, we need the high credit rating that the city enjoys now.”
“If I recall, after the 1994 ice storm, we had to use over $4 million out of our reserves, and it took some time for us to be reimbursed by FEMA,” added Councilman Owen Brooks. “I think when we have a discussion about our reserve accounts, we need to keep that in mind.”
The new rate goes into effect on March 21, 2013.