Dixon City Council considers water rate hikes

water faucet

DIXON – Dixon residents could be facing higher water bills in the near future.

Years ago, the City Council agreed to annual 2.5% increases in water fees, but the annual hike isn’t enough to keep the water fund in the black or to have a healthy reserve, said Matt Hansen, water and wastewater manager at Willett, Hofmann and Associates, which the city contracted with for a water rate study.

“If we just stay on this track with the 2.5% increase, basically cash reserves will be gone by the time we hit the midpoint of 2024,” he said.

The water fund was down about $500,000 in revenue because of the impact of pandemic restrictions on the city’s largest water user - Bay Valley Foods - and it’s in better shape during the last year but still falls below pre-pandemic levels.

Expenses have outpaced revenues at least since fiscal 2017, Hansen said. The city’s fiscal 2023 starts May 1.

He presented the council with three options for rate increases and recommended the highest increase to balance the budget by FY 2023, which would cost residential users an extra $6.81 a month.

He then re-approached the council with a new option with an increase of 7.5% capped at inflation, which would be around $4.60 extra a month, followed by a 5.7% increase the next year and 2.5% increase for the following 2 years.

Those rates would put the water fund’s net income in the black in FY 2024.

Wastewater fees would be temporarily frozen through FY 2026.

Public Works Director Matt Heckman said the goals of the rate study were to reflect covering costs of operational, maintenance and capital improvement goals as well as create a healthy cash reserve for the water and wastewater funds, avoid large-scale increases in a single year, and minimize the cost impact to residents.

“We understand that every penny counts, and we always have that in the forefront of our thoughts,” he said.

The council has not yet made a formal vote on the increases.

Rachel Rodgers

Rachel Rodgers

Rachel Rodgers joined Sauk Valley Media in 2016 covering local government in Dixon and Lee County.