Royse City council members approved a water and sewer rate increase at their last regular meeting, but there were some bumps on the road to approval.

Without a rate increase, the city’s water and sewer revenue would barely exceed expenses, Chief Financial Officer Joe Stegall told council members at an Oct. 11 special called meeting that preceded the regular meeting.

That situation, according to discussion, could result in the need for the city to dip into its fund reserve.

The rate increase is for this year only and will become effective on Nov.1. During a Sept. 8 workshop meeting, there was discussion involving the need for a rate increase each of the next three years.

Dan V. Jackson, managing director and chief executive of Plano-based, said during the September workshop meeting that most Royse City residents would see their water bills increase by $3 to $7 per month.

Residents who use about 5,000 gallons of water per month would see an increase of $3 to $6. Customers who use 10,000 gallons of water each month would see an increase of $6 to $7.

Stegall added that city officials will meet in November with a bond rating company. He said “it would put some pressure on our bond rating if we don’t have a rate increase.”

The bumps in the road began after Stegall told the city council that a letter received from the North Texas Municipal Water District on Sept. 23 informed the city that it had exceeded its take or pay amount. That would increase the city’s financial obligation to the NTMWD by $85,000 to $95,000, Stegall said.

The city’s minimum annual demand for water under terms of the take or pay contract is about 470 million gallons. This year’s actual use totaled about 527 million gallons, resulting in the additional expense. The 527-million-gallon figure will become the city’s new minimum annual demand.

The finance officer was asked whether he monitored the take or pay contract.

“I probably should have been watching that closer,” Stegall responded. “I guess I didn’t recognize. I had heard that our water sales were actually down this year, so I probably didn’t give it the attention I should have.”

“To me, a mistake of that proportion is not acceptable, non-excusable,” Councilman James Branch said. “Water is probably our biggest revenue generator. Correct? Water and taxes. And yet we overlooked. To me, that is just inexcusable.”

Stegall said a rate increase would have been recommended, even if there had been no NTMWD take or pay issue. The rate increase, he said, would generate approximately $291,000 and would give the city’s water and sewer fund a surplus of $175,000 to $200,000.

Branch responded again.

“I’ve been a businessman a long time. I understand the cost of doing business,” he said. “I understand that, but I feel like you’ve forced me into a corner now and if we don’t vote for it (rate increase), you’re going to tap into the reserves. Right?”

“I don’t have any choice,” Stegall answered.

A short time later, Janet Nichol attempted to move the council along to a vote.

“I think what has happened is very unfortunate and I think that you (Stegall) and Bill (City Manager Bill Shipp) both agree that we need to keep a closer eye on it,” Nichol said. “And if it’s asking North Texas to notify us regularly or whatever we’ve got to do, but regardless of that situation, we still have a rate change. So, I think we need to move on and decide what we’re going to do with it.”

The discussion continued. Later, when it appeared the discussion actually was drawing to a close, Mayor Jerrell Baley asked, “Anybody else?

“I’ll go on record I’m opposed to a rate increase this year,” Branch said. “I will be more willing to look at it next year.”

“Even under the circumstances you know it’s going to tap into the reserves?” Baley asked.

“I think you need to figure how to cut some fat out of that budget,” answered Branch.

“No fat,” responded Shipp.

“I definitely think there’s some fat,” Branch said.

“No sir,” Shipp followed.

“I bet I can find $100,000 worth of fat right now,” Branch said.

Stegall said he looked during the budget process and found maybe $35,000 that could be cut.

“Y’all are for big government and I’m not,” Branch said.

“With this budget, you’re calling big government?” Baley responded.

The discussion ended after that question.

Branch left the special called meeting at 3:50 p.m. and did not return for the regular meeting when the rate increase vote was taken. The special called meeting started at 3 p.m. and the regular meeting started at 5 p.m.

Baley, Nichol, Clay Ellis, Tom Crowley and new council member Matt Wheatley voted in favor of the motion to increase rates. Bill Bell cast the only dissenting vote.

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