Rawlins council reviews fees, holds most rate increases; water fund shortfall flagged

City Manager Tom Sarvey told the Rawlins City Council at its Jan. 21 work session that the annual January review of the city's rates and fees will largely recommend no new increases for fiscal year 2026, but warned council that the water utility stands behind on capital funding and will likely require future increases or grants to keep up with needed projects.

Sarvey opened the work session by describing the purpose of the review and why the city performs it each January, citing the relevant city ordinance that sets an annual schedule. He said staff had drawn together appendices with financial statements, revenue/expenditure comparisons and rate schedules for enterprise and general fund fees, and that he would focus on high-level highlights during the meeting.

Sarvey said last year's rate increases improved several fund positions and, after reviewing 2024 activity with department heads, staff recommended holding most rates at current levels for now to collect more data before proposing further changes. He said the single recommended change at this meeting was a proposed $25 annual renewal fee for special-use permits in the planning code; otherwise, staff will present any later rate proposals during budget season.

Why it matters: Sarvey told council the city's water enterprise is undercapitalized relative to the value of its system. He showed a condensed balance sheet in which unrestricted net position fell from nearly $2 million in 2019 to roughly $117,000 in 2023 and then rose after rate increases to about $1.3 million. But he said accumulated depreciation of water-system assets has outpaced resources and that the priority capital list for the in-town water projects totals roughly $48 million, while cash reserves remain around $2 million.

Sarvey said staff had raised water and sewer rates in late 2023 and that the increases produced improved operating results in 2024, but that the gap between accumulated depreciation and resources is growing and would require additional steps to address. He noted specific constraints from potential grant sources: the U.S. Department of Agriculture (USDA) Community Facilities guidance expects household water bills to be a set share of median household income and that Rawlins' computed monthly household charge remains about 30% below the USDA benchmark cited in staff materials.

Other fee highlights: Sarvey reviewed several non-utility fees and their recent collections. Highlights included the CATS bus fare (raised from 50 cents to $2; senior fare $1.50), which produced revenue gains but prompted council concerns about rider affordability; business-licensing revenues concentrated on nonresident food vendors; animal-licensing rates and enforcement (Sarvey estimated fewer than 8% of pets are licensed and suggested targeted outreach and enforcement); building-permit and contractor-license receipts; and recreation-facility fees, where the rec center saw membership revenue declines after last year's increases.

Council questions and points raised: Council members asked for more detail on who uses the CATS bus (Sarvey said primarily lower-income residents and that raising fares too high could reduce ridership), on whether nonresident business-license changes could help offset transit costs, and on the size and timing of liquor-license increases (Sarvey said state statute caps some liquor-fee amounts and the city's increases were benchmarked to peer cities). Several council members pressed staff to return with more targeted options rather than broad, across-the-board increases.

Next steps: Sarvey said staff will incorporate the rates discussion into the budget process and return to council with any recommended rate changes based on updated expenditure projections and more complete 2024 data. He asked council members to submit follow-up questions to him. No formal rate ordinance was introduced or adopted at the Jan. 21 meeting.

Sources: Presentation and financial appendix reviewed in work session by City Manager Tom Sarvey; council Q&A recorded during the Jan. 21 Rawlins City Council meeting.