Byrdstown officials Monday night approved a five percent increase to water and sewer rates beginning January 1, to address a negative financial position.
That position caused by rising infrastructure costs and state depreciation requirements. Mayor Sam Gibson said the increase is necessary to satisfy concerns raised by the Tennessee Board of Utility Regulation and the Comptroller.
“I’ve explained to the city council that, due to increased costs for parts and maintenance over the past few years since COVID and water sewer fund ending in a negative change in statutory net position, it’s in the best interest for the town to go ahead and increase rates an additional 5 percent beginning January 1st, 2027,” Gibson said.
Gibson said a state-mandated rate study suggested more drastic measures, such as an 18 percent water rate hike and an 80 percent sewer rate hike, to ensure a positive position through 2030. He said he rejected those scenarios because he did not want to hit residents with such high increases while the town maintained a healthy cash balance.
“I pretty well said, ‘Look here.’ You know, he did, when he said raise it 18 percent, maybe you could lower it back down a little the next year,” Gibson said. “I don’t like that kind of format. You know, it’s like taxes. You lower taxes a little bit, they want you to lower them every year. I don’t like that. So I said, ‘No.'”
Gibson said the town has operated with a negative change in net position for several years despite having over $1 million in the bank because state accounting rules require the town to generate enough revenue to cover the non-cash depreciation of its assets.
Gibson said the cost of materials has risen sharply since the pandemic, noting that two-inch water lines increased from 53 cents per foot to over $1.50 per foot. He said the town also faced significant expenses from repairing aging infrastructure, including $160,000 for two new intake pumps and new roofs for both the water and sewer plants.
“A small district like ours with a little bit of those kind of breakdowns shoots your prices, shoots everything out of pocket,” Gibson said. “And the other item, depreciation. Depreciation is increased.”
Gibson said the town has already implemented other cost-saving measures, such as leaving one water department position vacant and shifting some salary expenses to the general fund. He said the five percent increase is expected to generate approximately $60,000 in additional annual revenue.
In other business the board appointed Emily King to serve as the town’s Certified Municipal Finance Officer starting January 1, 2027, following the retirement of David Melton. The board also approved the purchase of an $18,985 high service turbine motor for Byrdtown’s water treatment plant.
