City commission nixes Walker-Sayle Unit rate cuts

The Breckenridge City Commission took no action to lower water rates for the Walker-Sayle Prison Unit during its meeting last Tuesday.

Breckenridge City Manager Andy McCuistion said if the city were to lower the prison’s water rates to a proposed rate of $6.20 per thousand gallons, then Breckenridge would lose revenue of $41,700, in addition to the $24,000 previously lost from lowering the rate to $8.60 per thousand gallons in April.

“If you’ve looked at the budgets in the water fund, we are spending $177,000 more than we’re bringing in so we are already having a deficit budget, except for our reserve,” McCuistion said. “We’re taking $177,000 out of our reserve this year just to fund the projects this year so anything you continue to take out of there will increase that $177,000, which will reduce our reserve in the water fund.”

McCuistion said if Breckenridge’s costs are higher than its revenues, then one of two actions must be taken - raise the rates or cut costs.

“At the end of the day, you’re going to wind up paying for all those costs and plus you have to make debt service payments,” he said. “That’s why we look at rates every year and adjust rates every year as needed.”

McCuistion added, during the city’s drought, the commission adjust water rates upwards to encourage water conservation, but artificially raising the rates cost the city revenues because citizens began conserving their use. With decreased usage came decreased revenue and projecting water/sewer revenues often leaves municipalities at the will of Mother Nature.

“We wanted to make people concerned so we raised the rate higher to encourage conservation, and when they didn’t use the water, and our water usage was low, then our revenue went down so we had to increase the rates to help cover some of the debt service and operational costs,” McCuistion said. “... I thought I was conservative on the projections on the water, and I thought I was conservative last year too, and I lost about $200,000,” McCuistion said.

Additional projects McCuistion mentioned during the meeting factored in the commission’s decision to keep the water rates at $8.60 per thousand gallons.

“We just spent $2.4 million on the waste water treatment plant,” McCuistion said. “We also spent $1,700,000 on putting the water lines in the city. We’re also paying a portion of the improvements that TxDOT is installing on East Highway 180. $2,000,000 worth of water lines will be put in over there, and the city is only paying 10 percent of that. For the South Highway 183 and North Highway 183 projects all together, TxDOT will spend about $4,000,000 on just utility improvements, and the city will only have to pay about $400,000 of that, so that’s a good deal for the city. That will make a lot of difference in the improvements in the system.”

McCuistion said challenges with projections and proposed rates aren’t exclusive to Breckenridge, and other cities face similar issues.

“Every other city is unique, but they all have the same issues they have to deal with. They still have to deal with debt services and operational costs. This is not unique to us at all,” he said.

While expressing dire consquences during the previous meeting, if the city chose not to lower its water rate to the Walker Sayle Prison Unit. In a follow up interview McCuistion said an immediate closure of the facility is not in the works considering any closure would require an action by state legislators. With the Texas house and senate now out of session, that decision could not be made until the 2019 session.

“The Walker-Sayle unit is not shutting down,” McCuistion said.

The Breckenridge American

BRECKENRIDGE OFFICE

114 East Elm Street

PO Box 871

Breckenridge, Texas 76424

Phone: (254) 559-5412
Fax: (254) 559-3491