Perry Council weighs three‑year plan to raise culinary water base rate toward $35

PERRY, Utah — Perry City Council members and staff discussed a multi‑year plan May 15 to raise the city—s culinary water base rate after staff and a councilmember presented analysis showing the water utility operating at an annual loss.

The analysis presented to the Council showed the water utility running a material operating deficit (about $200,000 in the fiscal projection shown). The presenter and councilmember Blake said the deficit means the utility cannot demonstrate the cash flow banks expect when borrowing and that continued operating losses would defer necessary pipe replacement, repairs and reserves.

Blake walked through a multi‑year option that phases a base rate increase: a first‑year increase that would raise the monthly base from about $21.31 to $26.74 (a roughly 21.8% jump), followed by staged increases over two or three years to reach a target base of $35. The proposal treats interest income and depreciation as part of the utility—s cash model and recommends explicitly restricting a portion of revenues into a capital/replacement reserve so money set aside is not spent on routine operations.

Council members discussed alternatives: spreading increases over four years, reducing the base water allowance from 10,000 to 5,000 gallons to reduce the necessary rate increase, relying on future grants for capital needs, or using existing fund balance to blunt near‑term increases. Staff emphasized that many capital grants pay for expansion or new infrastructure but generally do not fund routine replacement of aging pipes; grant eligibility tends to favor growth or new facilities.

Council direction and next steps included asking staff to: reflect a three‑year (or, if needed, four‑year) path toward the $35 target in the draft budget, present formal ordinance language or rate schedule for the public hearing, and revisit the numbers after one year of implementation to adjust pace if warranted. Councilors also asked staff to consider restricting (by ordinance or policy) the portion of rate revenue dedicated to replacement reserves and to present a clearer comparison of impacts on a typical residential customer.

The Council discussed related offsets: members asked to hold the planned 5% garbage rate increase in abeyance this fiscal year so the combined bill impact to residents would be smaller. Councilors also asked staff to present options in the public packet showing the fiscal effects of different phase‑in schedules and to invite the utility engineer (Brett Jones) or public works staff (Zach) to review assumptions about construction inflation and the utility—s capital needs.

Council members and staff repeatedly emphasized the distinction between operational shortfalls (which rates must cover) and capital expansions (which can be funded by restricted impact fees or grants). Several members said they preferred a shorter phase‑in (three years) to avoid repeatedly "chasing" inflation, while leaving the option to slow the schedule if revenue trends or grant awards reduce the need for the full increase.

No formal rate ordinance was adopted at the May 15 work session; staff were directed to prepare draft rate language and supporting analyses for upcoming hearings and to incorporate council feedback.

Ending: Staff will return with a formal rate schedule and proposed language for a public hearing; councilors agreed to revisit the results and possible adjustments after the first year of implementation.