We are supposed to have some kind of public meeting that gives the people a chance to understand and question the recent water and wastewater rate study that the Truth or Consequences City Commission accepted at the Jan. 16 meeting, and I suggest any city water or wastewater customer attend, because what is proposed is 25 percent increases each year starting July 1, 2026 through July 1, 2029.
As stated in a prior article,
https://sierracountycitizen.org/water-and-wastewater-rates-are-going-up-even-more/
NewGen Strategies and Solutions only submitted a PowerPoint presentation at an October meeting and the city commission put off approving or accepting the engineering firm’s report until they received the actual report. For some reason that took from early October 2025 to mid-January 2026 to be delivered and accepted.
There is another timing mystery. I’ve been hearing about a water/wastewater study for three years or so. When we finally see it, it uses fiscal year 2026 as the “test year,” which is only half over, putting the study’s footing on shaky ground that is based on projected budget figures.
I’m not sure who set the parameters of the study, but it’s basically reverse engineering. The premise for the study is, “how much do rates have to go up so that we can pay back a $5 million revenue bond that would be issued in 2029 to fix the wastewater treatment plant? NewGen estimated a 20-year bond/loan at 2.5 percent interest and $100,000 issuance cost will add another $315,000 to the combined water and wastewater yearly debt, which is already $451,000, bringing the yearly nut to $766,000 that water and wastewater fees have to cover.
The study also adds a $50,000 yearly expense or $100,000 total to both departments’ bottom line for “pay as you go,” a confusing term for money set aside to get partially prepare for the $5 million revenue bond debt payment.
Inflation of 4 percent a year is added to every line item expense, also jacking up the “needed revenue” estimate at an alarming rate.
And then there is the bizarre “volumetric bill revenue.” Your base rate will be based on the size of your meter. Most residential customers have a ¾-inch meter. Other customers have 1- 1.5-, 2-, 3- and 4-inch meters. All pay the current base rate of nearly $19.50 a month. The proposed increases are exponentially higher for each half inch of meter size. By 2029, ¾-inch will pay $21.28 a month, 1-inch $29.60 a month, 1.5-inch $45.56 a month, 2-inch $64.71 a month, 3-inch $115.79 a month and 4-inch $173.26 a month base fee. In addition, the per-1,000 gallon rates will increase 25 percent a year, but from the start, heavier water users pay more for each 1,000-gallon increment.
What I kept looking for, but could not find in this study, nor in past or present city budget sessions or among yearly city budget line items, is estimates for emergency repairs. Of course past figures must be produced to predict this year’s costs and future years’.
The 2026 budget, which ends June 30, 2026, is no different from past budgets. The line item “emergency repairs” says zero. We all know, because we have been told dozens of times since 2019 by city managers and department heads that the city’s water and wastewater staff are out nearly every day fixing leaks, so the budget is hiding those costs.
Go to pages 371 and 372 of the city’s Jan. 16 meeting packet (the NewGen study runs from pages 301 to 410 of the packet) to see the FY2026 water and wastewater expenses. https://cms5.revize.com/revize/truthconsequencesnew/1-16-26%20CC%20Agenda%20Packet.pdf?t=202601201351090&t=202601201351090
I figured emergency repairs are hidden in field supplies, maintenance (grounds, equipment, other), capital equipment and overtime for workers for both water and wastewater. They total about $594,000.
This does not include what the city pays SmithCo for emergency repairs, a local engineering firm the city has hired for emergency repairs since 2019 or so. At the Jan. 14 meeting, Whitehead said he needs to hire a second firm to do emergency repairs. I estimated SmithCo was paid $72,000 a month in a 2023 article, which comes to about $864,000 a year. See:
I asked Whitehead how he is currently paying SmithCo and he said he is using general obligation bond money. The people agreed to increase their property taxes in 2023 so a series of $750,000 tranches totaling $3 million in G.O. bonds could be issued to repair the water and wastewater systems and attendant road tear ups. If G.O. bond money is exclusively used to pay SmithCo and other emergency repairs done by private engineering firms, then the study should have made that clear.
It is unfair to fee payers to not quantify the cascade of costs resulting from 60 years or more of neglect of the water and wastewater systems. It needs to be done to justify the exponential, compounding and rising costs of water and wastewater fees.
The people didn’t get maintained systems for their past money. The neglected systems have and will cost more to repair than well-maintained systems with regular end-of-life system repairs that were planned. Construction costs are through the roof. Emergency repairs are life support, but the patient is barely alive–over the summer the leak rate was 57 percent according to Jamie Foreman, the departments’ supervisor, while perhaps costing $1.46 million a year (SmithCo $864,000, water and wastewater departments $600). That’s a lot to ask of fee payers without telling them.
But if the people were told, then it would expose the city commissions’ to accountability, to verifiable bad fiscal oversight and bad governance.
This study is all about looking forward and predicting costs that are hard to pin down.
I urge rate payers to ask questions at the public meeting that is not scheduled yet.
Thank you, Kathleen. A very thoughtful, thorough review of official malfeasance.