The Flagstaff City Council has put off until later this summer a staff proposal to increase residential water bills by 35% over the next five years. Utility officials said the higher rates are needed to avoid a deficit.
The rate increase would have generated an additional $1 million a year for the water agency. Without the extra money, city officials said, the municipal utility could be posting a deficit by 2012. That would require annual contributions from the city, officials said.
In 2009 the council transferred $1 million from secondary property tax revenue to the utility’s debt service fund when revenues were insufficient to cover the budget.
The utility’s $17 million annual budget includes $6.3 million for debt service on bonds issued to drill new water wells and build a wastewater treatment plant. The water department’s revenues were down $2.8 million in fiscal 2009 due to slow residential growth.
Flagstaff’s GO debt is rated Aa3 by Moody’s Investors Service and AA by Standard & Poor’s.
