Little Rock Wastewater will be insolvent by mid-2012 unless the Sanitary Sewer Commission raises rates or cuts spending, according to a new financial plan presented to the commission last week.
The warning from finance director Jim Barnham said the sewer utility "will become insolvent by mid-year 2012 without one of the following: a rate increase, decrease in [operations and maintenance] expenses, or reduction in funding capital costs out of sewer revenues."
The financial plan said the utility would need a 20% rate increase in 2012, 10% in 2013, 5% in 2014, and 5% in 2015. The current rate is about $24.10 a month for city residents.
Little Rock's $177 million of outstanding sewer revenue bonds are rated A1 by Moody's Investors Service.
The committee is an advisory board that governs the wastewater utility. The city board of directors must approve rate increases.
Mayor Mark Stodola, a nonvoting member of the commission, said after the meeting that the utility would not approach insolvency in 2012. Steps will be taken to avoid that situation, he said.
Utility chief executive officer Reggie Corbitt said a wage freeze has been instituted on all but the lowest-paid employees and most capital improvement projects have been halted.