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City warns of structural deficit in water and wastewater utilities; sale of utilities raised as long-term option
Summary
Staff told the committee the water and wastewater utilities run structural deficits because charter constraints limit fee changes, creating ongoing subsidies from the general fund and deferred maintenance. Staff said selling the utilities remains a possible long-term outcome if subsidies continue.
City staff told the budget committee that the water and wastewater utilities carry a structural funding gap because a voter-approved charter provision prevents the city from adjusting user fees without a public vote. "So moving forward, you're going to expect the cost of producing these services to increase without the ability to adjust the user fee rates," the city manager said, adding that the result is increasing subsidies from the general fund.
During questions, staff said the deficit could force difficult choices, including the potential sale of the utilities to a private or regional provider that could set market rates. The manager characterized the shortfall as a long-term structural issue and said the council directed formation of an ad hoc committee to study utility-user rates and possible solutions.
