Olympia water, wastewater and garbage rates likely to rise next year

Olympia Water Resources Director Eric Christensen and Waste Resources Director Gary Franks recommended increasing utility rates to meet projected costs for 2023.

At the Utility Advisory Committee meeting held yesterday, Christensen said their approach in developing the budgets was to "hold the line."

"We scrubbed the budgets, particularly wastewater and stormwater, and eliminated all but essential inflationary increases. We have done just about everything within our control, minimize rate increases, and tried to limit our enhancements requests to only critical needs," Christensen told the advisory committee members.

Waste Resources

Franks shared that Waste Resources has increased revenue by 7%, or $922,173, but the expenses also increased by 10.6%, or $1.4 million.

"The revenues are not in pace with expenditures," Franks said, pointing out a $600,000 deficit.

To keep up with the operation costs, Franks recommended a 4% increase in each refuse collection program, such as residential, dropbox, and commercial. He said there would be no increase in the organics program.

Waste resources sources of revenue include:

• Dropbox – a program that hauls drop boxes of a wide variety of sizes to meet the needs of businesses, multi-family complexes, residents, and contractors. They have about 4,000 calls a year. The dropbox revenue represents about 10% of the total revenue earned.
• Commercial program – the front load and reload trucks to haul containers. They have about 1,400 customers.
• Residential program – they have over 15,000 residential garbage customers. They have 100% recycling, and those that recycle get a reduced rate on their bill.
• Organics program – they provide commercial organic to 170 commercial facilities. They have over 9,000 residential customers.

He said the key budget drivers for 2023 are:

• Residential program. Since the recycling crisis, Franks said, the program has not rebounded from recycling revenue loss. The program is out of balance by 13%
• Indirect charges increased to 44% or $419,500
• Rising fleet costs – fleet rent increased by 37.1% or $220,182; fuel increase – 87.8% or $257,947
• Garbage disposal fees in commercial and drop box program increase by 6.2% or $231,753

Drinking water, stormwater, wastewater

According to Christensen, the drinking water staff propose a 6.6% rate increase.

He said the utility revenue has decreased to $761,000. "Based on our rate consultant's evaluation, we can assume we will continue to see diminished revenues due to the downward drift in commercial revenues."

Despite an increase in revenues from residential accounts – 1.48%, the city saw a decrease in commercial revenues, approximately 4.8%.

He explained that since the pandemic, fewer employees are commuting to work in Olympia, and many continue working from home. Many commercial accounts are either slow or closed.

He added that they would reduce their capital funding from $1.4 million to $700,000 for 2023 to address cash flow and revenue issues.

He said the other key budget drivers include a 10% increase in employees' salary and benefits, totaling $351,000, and an indirect cost of $634,000 for public works administration, utility billing, insurance, fleet and fuel, information services and software, and finance.

In addition to the indirect cost in the budget, Christensen said they would cover 25 percent of the cost of a full-time drinking water director position, with the balance covered by a federal subsidy. He added that the utility needs an accounting technician and a survey mapping technician.

Wastewater

The utility staff proposes a 9.8% increase in wastewater and 11.80% in storm and surface water.

Christensen said the critical budget drivers for wastewater, storm, and surface water are indirect costs, employees' salaries and benefits increases, supplies, and services.

Overall, he said, the preliminary look at changes to the typical monthly residential utility bill would be between a 5.8% and 6.1% rate increase, which equates to about $15.31 to $17.05 per each two-month billing period, or about $7.65 to $8.53 per month. 

Christensen reminded the committee that Olympia has the Lifeline rate program for low-income, disabled, or elderly customers and the Helping Neighbors program to help other customers.

"We will work to further advertise these programs, particularly as rate increases rollout," he added.