Montrose officials debate water and sewer rate hikes to close 2025 budget gap

City of Montrose staff presented preliminary 2025 budget figures and told council that staying at current water and sewer rates would leave the utility funds nearly balanced but with a small shortfall, while various rate increases would move the funds toward a modest reserve.

The staff member leading the presentation said that keeping the current water rate of $7.75 would leave the city about $31,000 short of projected expenditures for 2025 and showed that a 5% overall increase still left revenues below expenditures. "If we increase it partially, we need to get us closer so that we're not at a deficit," the staff member said.

A council member argued for a larger, sooner increase to avoid repeated shortfalls in future years, saying the city should "rip the bandage off now, get ahead of it" rather than incrementally raising rates. The council member noted the cumulative burden on residents: "It's only $5, but it's $5 here, $5 there," and warned that delaying increases would leave the city in the same position at the next budget cycle.

Public Works Director (self‑identified) emphasized capital needs beyond routine operations, saying that "eventually, every stormwater pond in this town... at one point or another, it'll have to get dredged out" and that the dredging track on current estimates is about $2,030,000 for roughly 29 ponds.

Staff walked the council through example rate scenarios, noting that a 5% increase would change certain unit rates (to illustrative figures staff provided) but that to fully cover projected expenditures the city would need larger increases (staff cited needed rates in the illustrative examples). Staff also cautioned about bond arbitrage: money from the 2021 bond is undergoing arbitrage reporting and roughly $340,000 tied to that analysis should not be spent until the arbitrage outcome is clear, a staff member said they expect to have more information in two to three weeks.

Why it matters: Council members must balance the need to fund capital maintenance and utilities without imposing sudden shocks on residents. The staff presentation captured tradeoffs between modest near‑term increases and larger immediate adjustments that would create a clearer revenue position through 2025 and beyond.

Next steps: Staff said they will continue modelling rate scenarios and follow up on arbitrage reporting; the preliminary budget discussion will be refined in future meetings. The meeting adjourned after routine closing business.