City Manager presented a proposed 7% increase to the sewer and water rates, saying, "we are proposing a 7% increase in the sewer rate to bring in revenues of 1,630,000.00." He told the council the combined additional revenue and other receipts would put the sewer fund near $1.7 million for the coming year and that a $250,000 transfer from sewer capital will fund predesign work for a planned plant rehabilitation.

The proposal is tied to operating and capital cost pressures. "This cost is more to produce the same amount of water and treat the same amount of sewer ... the cost of chemicals, the cost of everything that we need ... just continues to go up," the City Manager said, adding the city is carrying about $1.4 million in water debt and cited a national Bureau of Labor Statistics chart showing large increases in consumer water costs since 2007.

The City Manager gave concrete bill examples: for an average residential customer using 6,500 gallons per month on a 5/8-inch meter, "their bill for the water portion is gonna be right now at about $56.51. With that 7% increase, that goes up to $60.46 a month." He said the combined water-and-sewer increase for an average residential customer would be about $6.43 per month. He also noted a currently codified sewer "max charge" that now caps at $35.64 and "under this proposal ... we would just go up 7% on that," which the manager said would raise the capped sewer charge by about $2.50 per month for affected customers.

Outside-the-city customers would also see an increase under the proposed rates: "Outside of city customers pay $70.65 a month. With this increase ... it would go to $75.59," the City Manager said, attributing the change to the new outside-city rate structure adopted earlier.

Staff emphasized that the increase supports both operations and cash capital improvements to avoid larger one-time raises later. The City Manager said the rate study underlying the proposal "was only done last year. So it's not 5 years old — it's very current." He asked council members to provide guidance before a July 17 target date when he will present the proposed budget and the council will take a first reading of the budget and tax-rate ordinances. He explained the schedule: after the council votes to accept (not finally adopt) the proposed budget on July 17, the document will be posted for a 30-day public review period followed by public hearings and a goal of formal adoption at the Aug. 28 council meeting, with the property tax rate adoption planned for Sept. 11.

Council members asked for additional operational detail. One asked staff to run a report showing how many customers reach the sewer max-charge cap in a given month and to research the historical origin of the cap. The City Manager agreed to provide those data.

No formal vote on the rates occurred in the meeting. The City Manager said staff will fine-tune numbers and return to the council at future meetings for further guidance and formal action.