Telluride Town Council began its annual budget discussions Tuesday with a first look at several funds that comprise the overall budget. The proposed 65 percent rate hike depicted in the Water and Wastewater Enterprise funds dominated council’s morning discussion as council member Jessie Rae Arguelles made a strong case to protect in-town water users from the steep increase.
The Water and Wastewater Enterprise Fund reflected an increase in monthly water rates from $77 to $127 for residential in-town users. The increase, Herzog explained, was based on a recent rate study conducted for the town’s Public Works Department and was what town officials based last year’s 70 percent rate increase for wastewater services on. The study takes into account several infrastructure projects on the horizon, some of which have been put off for a number of years. Arguelles said she didn’t want to see consumers forced to absorb another steep increase in the wake of last year’s rate hike.
“My issue is constantly passing this along to customers,” she said, calling the increase “absurd.”
A few of the proposed projects, Herzog said, include “significant improvements at Mill Creek,” which comprises replacement of 60-year-old pipes with high-pressure capacity infrastructure. In a contract with Idarado, a high-pressure line also needs to be run into the powerhouse sitting atop Bridal Veil Falls.
“(The powerhouse) can’t be turned on again until the pipe is replaced,” said Town attorney Kevin Geiger.
Some on council defended the rate hike as a necessary cost for the upkeep of essential infrastructure.
“Clean, safe water is our most important commodity,” council member DeLanie Young said. “If we defer any of these projects any longer, they just get more and more expensive.”
Council member Geneva Shaunette agreed.
“I trust what needs to be done,” she said.
But Arguelles was unmoved.
“We can’t price people out of this community,” she said.
The ensuing discussion focused on how to lessen the rate of increase with alternative sources. Council eyed the reserve fund, which is currently at 30 percent, a healthy amount, given numerous forecasts that point to an impending economic downturn.
Young allowed that while the reserve is currently “generous” she was unwilling to deplete it saying, “the future is not rosy.”
“I caution against depleting all your reserves,” Herzog concurred. Colorado’s TABOR amendment requires governments to maintain at least a 3 percent reserve.
Herzog further explained to council that enterprise funds (a governmental accounting of funds used for services in which external users are charged a fee) “need to be self-sufficient. They can be infused.” He suggested that perhaps the capital fund would be a better place to look for a way to buffer the proposed rate increase.
Herzog also pointed out that the rate study observed that with the proposed increase, Telluride’s user fees would be more in line with similar mountain towns.
Possible funding sources for the water-wastewater treatment fund included charging visitors — particularly the town’s high volume of vehicles during the Fourth of July holiday — but Geiger said that exacting a fee per vehicle is more common in a toll road scenario, in which the fee is directed toward maintenance of the road.
Another idea floated was increasing the town’s surcharge on festival tickets. The current surcharge is used to help pay for increased law enforcement needs and the impacts on Town Park’s fields and facilities. Mayor Sean Murphy wondered if water use in the park could be tied into a wristband fee, but Herzog said water use in the park specifically was “not huge.”
Overall, town water use during peak seasonal use, Arguelles argued, could be monetized.
“How do we share responsibility with visitors with water use?” she asked.
“The visitors are paying,” Young countered, though she did not disagree, in concept, that the proposed increase was hefty.
“I think there should be some rate increase,” she said. “I’d be comfortable with half.”
Herzog and town finance staff sought further direction and settled on scheduling a retreat for Oct. 11, during which they can have a more in-depth discussion before council’s Oct. 29 meeting.
The remaining items related to the morning’s work session on the budget — the parking and rental housing funds, open space fund, affordable housing fund, airline guarantee fund and others — were presented with little comment and no further direction given to staff.