MISSOULA — Citing inflationary costs and the need to maintain and improve Missoula's water utilities, the City Council on Monday approved a rate increase for each of the next three years and asked that a cost-of-service study be conducted before any future increases are sought.
The current utility rates charged by the city are based on a 2019 service study and remain among the lowest in Montana, with an average customer fee of $59 a month for water, wastewater and stormwater combined.
But the cost of maintaining the system, wages, power and needed improvements have climbed. If the city wants to stay on top of its infrastructure needs, a fee increase is necessary, according to Logan McInnis, deputy Public Works director for utilities.
“We require additional revenue to keep up with inflation and to continue redoing our aging infrastructure,” he said. “Our philosophy is to replace aging infrastructure before it fails. We need to increase our utility capacity to meet anticipated growth.”
As adopted, fees for all three services would increase by $4.18 a month in 2025, followed by an increase of $4.92 in 2026 and $5.33 in 2027. The additional revenue, which is gained through user fees and not property taxes, would enable public works to address a number of needs.
Among them, increases to the storm-water fee will enable the city to improve the quality of water discharged into the Bitterroot River and complete a storm-water project in the South Hills.
The wastewater fees would fund improvements to the city's resource recovery facility and help fund a second solar project to further cut greenhouse gas emissions at the power-hungry wastewater plant.
“Our water and wastewater utilities combine to use about 58% of the city's overall greenhouse gas emissions. We need to try and reduce those numbers,” McInnis said. “We're working on a plan for a second solar farm at the resource recovery facility. There's a pretty significant electrical draw out there we're not providing solar for.”
The increase in water fees would also help the city step up its capital improvements, such as replacing old water pumps and addressing leakage in the system.
Under Mountain Water ownership, the system's leakage rate became infamous during court proceedings. Since taking ownership in 2017, the city has reinvested fee-generated revenue back into the system and has slowly driven the leakage rate down.
But McInnis said the city remains short of its goal to replace 1% of the aging water mains each year. In the past few years, the city has replaced around 2.5 miles of water mains annually, though it looks to replace 3.5 miles.
The fee increase to the water system would also address power-hungry pumps and enable the city to help customers replace leaking water service lines, McInnis said.
“A 10-gallon per minute water service leak costs our utility about $1,000 a year in power and chemicals,” McInnis said. “This assistance would include expanding our loan program to incentivize the replacement of leaking service lines rather than doing a band-aid repair, which is what a homeowner would typically choose to do.”
Approval of fees
The City Council approved a fee increase for all three utilities, with council members Bob Campbell and Sandra Vasecka voting no on all of them. Council members Kristen Jordan and Daniel Carlino voted no on the increase in water fees.
Carlino sought to increase existing subsidies provided to low-income customers, though his motion failed. The subsidies would have been paid by other customers of the water utility.
“With the cost of housing and rent and our electric bills with NorthWestern going up so much, and our groceries, and now the city increasing water bills, the cost to live in Missoula is way too high,” Carlino said. “It would be great if we could do something to help low-income (users) get their basic needs met, like water.”
Several members of City Council agreed that an increase in subsidies could be explored during the next cost-of-service study, but doing so could run afoul of the law, which requires that utility fees be charged equitably.
As it stands, the subsidy for low-income water users is set to increase each of the next three years.
“There are people who don't quality (for the subsidy) also living paycheck to paycheck,” said council member Mike Nugent.
Council members Vasecka and Campbell voted against all three fee increases, suggesting that the city funds an array of questionable programs when it could be investing in the necessities of local government, such as public safety and utilities.
Campbell said the fee increases will have a “compounding impact” on owning a home.
“Not only are we asking folks to hold their breath when they're opening their property tax bill, now we're asking them, after all is said and done, to hold on to their wallet because here comes a series of rate increases,” Campbell said.
McInnis said that if the fee increases weren't approved, the city risks a number of potential failures, including sewage spills in the Clark Fork River, water pollution, a failure to meet its debt obligations and a failure to make capital improvements.
Most members of City Council weren't willing to take that risk.
“We're starting the tackle the deferred maintenance and get to a sustainable place,” said council member Gwen Jones. “We pull our drinking water from an aquifer and need to keep our sewer lines intact.”
The next fee increase will take effect on Jan. 1, 2025.
