Newport Council Repeats Water and Sewer Rate Increases as It Seeks to Chip Away at $1.5M Interfund Gap

The Newport City Council voted to repeat the utility-rate increases it adopted previously, as part of a broader financial review that highlighted allocation practices, time-study results and a long-running due-to/due-from imbalance between the general fund and the water/sewer enterprise funds.

The motion, made by a council member in the record (speaker 9) and seconded (speaker 2), would apply the same increases used in the prior cycle: sewer metered +8%, sewer nonmetered +26%, water metered +6% and water nonmetered +6%, with the council setting an effective date of Nov. 1 for spring billing. The motion passed by voice vote; the meeting record shows at least one recorded dissenting 'nay' and the chair announced the motion carried. The transcript does not include a roll-call tally.

Treasurer James Johnson outlined how water and sewer revenues and expenses have tracked through the fiscal year and why increases are being recommended: he said the last set of increases produced roughly $120,000–$140,000 in additional annual revenue and warned the utilities continue to run operational shortfalls unless rates are increased. Manager Jonathan Delabrio presented a time-study and budget-status materials that attempted to replace previously used applied-percentage salary allocations with actual hours worked for water and sewer tasks.

Delabrio described the city's sweep-account mechanics (excess operating balance swept into a separate account and replenished when needed) and said some line items appeared skewed because capital project costs (for example, an East Side water tower project) and expected reimbursements had not yet posted. He cited an East Side water tower charge of about $703,000 that has been posted without an offsetting budgeted reimbursement; that posting contributes to an appearance of high expenditures in the water fund.

Council members and residents pressed for clarity on two linked problems: the use of applied percentages in prior budgets (the transcript records examples of staff allocated at 45% or 60% to water/sewer), and the inequity concerns stemming from nonmetered accounts. Several speakers recommended accelerating meter installation so billing better matches usage; others urged caution about the near-term financial impact on vulnerable households.

Pam Laird, a longtime resident, criticized past allocation practices as a "sleight of hand" that shifted money away from citizen oversight, and asked what guarantees residents have that the same errors will not reoccur. The mayor and manager said the council will stop using the historical applied percentages and instead adopt time-study actuals going forward; they also said they would not retroactively force water/sewer to repay prior transfers but would focus on forward corrections and multi-year rate adjustments to chip away at the accumulated gap.

Council members discussed options to ease hardship: the Perley Niles Fund (a local assistance fund referenced in the meeting) provides limited support for residents in financial hardship but can use only interest income and has residency and eligibility limits. Treasurer Johnson also noted an outstanding accounts-receivable issue (discussed later in the meeting) involving a roughly $165,000 overdue balance from a correctional facility; staff said they are coordinating with the facility to reconcile leak-related charges.

Council directed staff to provide calculations showing the dollar impact of the proposed percentage increases on typical household bills, to present projections that compare multi-year rate scenarios (including gradual increases) and to return with an explicit plan for how the council will phase the increases and account for any remaining gap between utility revenues and expenditures. The council's stated approach is to raise rates incrementally while switching payroll allocations to time-study actuals and pursuing meter installation to improve revenue equity.

The vote to repeat the previous rate increases was the formal decision on the table; staff will bring projections and implementation details back to the council before or in support of the November effective date.