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San Marcos staff propose utility-rate increases; council signals support for public hearings
Summary
City staff recommended utility adjustments — electric +4.4%, water/wastewater +10.4% (combined), resource recovery +1% — to meet legal debt-coverage minimums and rising contract/debt costs. Council generally backed placing the adjustments on Sept. 2 public hearing agendas.
City finance and utilities staff told the San Marcos City Council on Aug. 19 the city needs modest utility-rate increases to meet legal debt-service coverage requirements and to cover several unanticipated cost drivers.
Staff recommended a 4.4% effective rate adjustment for the electric utility to reach a roughly 1.22 debt-service-coverage ratio, a 10.4% combined effective adjustment for water and wastewater (water 10.8% and wastewater 9.4%) to meet a 1.2 coverage threshold, and a 1% increase to the resource-recovery rate. The proposed adjustments would increase the average combined utility bill by about $16 per month — a roughly 6% combined change across all utility funds, staff said.
"When we looked at that and you guys made that commitment last year that we were gonna fix the financial situation ... you need that 4.4 to be able to get over that 1.2 that's the legal minimum required," said Tyler (speaker 15), the utilities director, explaining recent unanticipated debt service and contract increases.
Staff identified large drivers behind the water/wastewater change, including a $2.5 million increase in debt-service tied to recent Alliance Regional Water Authority borrowing and higher contracted treatment payments. For the electric fund, staff cited an estimated $690,000 revenue loss tied to policy changes around late fees and other operating pressures; a 4.4% adjustment was presented as a gradual approach to stabilizing the fund.
Council members generally signaled support for placing the recommended adjustments on the Sept. 2 public hearing agendas. The resource-recovery 1% increase was approved unanimously by voice at the workshop; council members signaled they were also comfortable advancing the electric and water/wastewater recommendations to public hearing so residents can comment.
Next steps: the recommended rate adjustments will be listed for public hearings on Sept. 2 with final action anticipated as part of the Sept. 16 adoption process.
