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Gallatin consultants advise phased water, sewer increases to close shortfalls
Summary
A third‑party study presented to the Gallatin City Council recommends incremental, two‑year residential and commercial volumetric increases and higher customer charges for sewer to close a multi‑million‑dollar revenue shortfall tied to planned capital debt.
A Jackson Thornton consulting team told the Gallatin City Council Committee on Oct. 28 that the city's water and sewer utilities currently recover roughly 80¢ to 84¢ on the dollar of the systems' calculated revenue needs and face large planned debt service tied to upcoming capital projects.
Jackson Thornton summarized the water analysis, saying the water system's cash requirement is about $16.2 million, with roughly $850,000 expected from non‑rate sources. The consultants reported an 80% current recovery rate—about a $3.3 million shortfall—and recommended modest, phased volumetric increases over two years to avoid sharp single‑year jumps. The proposed water changes would raise residential volumetric charges by $0.15 per CCF in year one and another $0.15 per CCF in year two (a $0.30 total increase), with larger increases proposed for commercial and irrigation classes and a 50¢ total increase for wholesale customers. The firm illustrated an average residential customer using about 6 CCF would pay roughly $1.80 more per month at full implementation, representing about a 5.7% two‑year increase.
On sewer, the consultants said the revenue requirement is about $11.3 million and rates currently generate roughly $10.7 million, leaving an under‑recovery near $1.7 million. They recommended raising the monthly customer charge on sewer by about $1.54 each year over two years and adding $0.10 per CCF each year to volumetric charges; the civic center and separately metered, high‑evaporation industrial accounts would see tailored adjustments. At full two‑year implementation consultants projected recovery would improve to about 93¢ on the dollar and generate roughly $980,000 in additional revenue using FY2024 billing statistics.
Council members asked for average bill impacts, the consultants provided examples, and staff discussed options to soften impacts for vulnerable customers. City staff asked council to consider returning with a resolution and ordinance for formal rate changes and to consider a targeted senior assistance program to offset costs for low‑income older residents.
The consulting team framed the recommended path as a measured, multiyear approach aligned with when major debt service is expected to begin, giving the community time to step rates up without abrupt shocks.
What happens next: staff told the council they will draft implementing resolutions and ordinances to appear on a future agenda for a formal council vote.
