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Higher utility rates due to maintenance
While all eyes were on Bellevue’s capital and operating budgets this winter, utility rates faced an increase of 10.1 percent in 2013, and an additional 5.9 percent the following year, an increase that some residents have labeled stealth taxes, in a budget year otherwise referred to as “status quo.”
The rate increases were mostly attributed to infrastructure maintenance and key capital projects, as well as a basic pass-through of the cost of water sold by Cascade Water Alliance and Waste Water treatment by King County. The average Bellevue household would see monthly bill increases from $123.52 to $135.97 in the first year implemented.
“The thing to remember is that utilities is not a government function,” said Nav Otal, director of the department. “It’s a business working and operating with the city of Bellevue. So we don’t have any tax revenues. In fact, just the opposite, we pay taxes to the city of Bellevue like any other business does. That’s the first thing most people don’t realize.”
While the city may experience a development boom, as it has in recent years, that keeps property taxes from spiking, utilities has very little natural revenue growth as a result of development.
Otal adds that in this year’s budget and the last, utilities has done a lot of cost containment, even laying off employees and cutting costs in the utility’s conservation program. But above all, she says, the department has a responsibility to maintain service.
Of the rate increases, 6.1 percent is attributed to wholesale expenses, and 2.2 percent to construction. Fifty-seven percent of the budget is bills the department pays to others, a slice of the budgetary pie Otal says the department has no discretion over.
Most of the city’s system was constructed in a narrow window of time, said Otal, as the city developed at a rapid rate in the ’50s and ’60s. Asbestos cement was used in piping, though it has since been found to deteriorate at a faster rate than other materials. When it breaks, it can result in catastrophic failure. Otal predicts rate increases of about four percent a year for the near future in order to renew the city’s 1,600 miles of pipeline.
“Utilities is unfortunately kind of out-of-sight-out-of-mind,” she said. “People just don’t think about utilities until there’s some disruption of service. Otherwise you turn on the tap water, it comes safe to drink, and nobody thinks about it.”
Several residents, who wished to remain anonymous, pointed out that while bills themselves may seem reasonable, even the $8 average monthly increase in 2014, might not be feasible for some low-income families. Additionally, the city’s message of “no new taxes,” was dishonest, they argued.
But concerned residents and the utility department can both agree that what’s at stake is something nobody can do without.
“We have this unique challenge because the system is getting old and that’s something our customer doesn’t see,” said Otal. “If you have a road with potholes you know they’re there. If you have a pipe that’s decaying, nobody knows until it bursts.”
Otal added residents can expect gradual rate increases for the next several years while capital projects, like the pipeline renewal, are undertaken.