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Council hears water and sewer fund will draw on reserves without changes; rate review planned
Summary
Officials said the water and sewer enterprise is facing pressure from capital spending and repairs and that the 3% scheduled rate increase may not be sufficient; staff will study meter accuracy, fees and other adjustments before recommending any additional rate change.
Biloxi staff told the City Council at a workshop that the water and sewer enterprise fund will likely reduce its fund balance this fiscal year unless the city takes steps to increase revenue or reduce costs. A staff presenter reminded councilmembers that the water and sewer operation is an enterprise fund and that revenues are intended to be spent within that fund. The presenter said the 3 percent rate increase already scheduled through 2027 may not be enough to cover current outlays and capital investments. Why it matters: the water and sewer enterprise supports critical services; a sustained shortfall could force higher customer rates, reduced services, or tapping reserves. Details from the discussion: - Staff said capital outlay and repairs have reduced excesses and that, without changes, the fund will "lose fund balance again this year." The presenter estimated the fund would start the year with about $3.2 million in reserves. - Potential offsets cited included pending FEMA reimbursement (staff said roughly $600,000 remains outstanding for generators purchased two years ago) and improved meter-read accuracy, which staff said may increase billed revenue. - Councilmembers asked whether repairs are performed in-house or outsourced; staff said the answer depends on the repair type and that some emergency or specialized work is contracted out. - Staff recommended additional review before proposing any rate increases beyond the scheduled October 1 adjustment; they asked for time to do a deeper analysis of tap fees, termination fees and other charge categories in addition to base rates. What the council directed: staff asked for time to return with a detailed analysis and possible proposals; councilmembers emphasized not making hasty rate decisions without the deeper review. Next steps: staff will continue analysis of meter accuracy, contract costs, capital needs and outstanding FEMA reimbursements and report back with specific recommendations.
