WATER/WASTEWATER RATE STUDY - FREQUENTLY ASKED QUESTIONS
The water/wastewater fund is an enterprise fund. What exactly does that mean?
According to the rules of the Governmental Accounting Standards Board, the water/wastewater must be accounted for as a separate fund from the General Fund as it is a business-type activity of government. Since it is similar to running a business, revenues (user fees) should cover the cost of the service, which is to operate, maintain and provide for necessary capital or capacity improvements to the water/wastewater system.
What are the typical expenses of the water/wastewater services?
Expenses include the cost of water purchased; in the City of Breckenridge's case, we purchase water from West Central Texas Municipal Water District, in addition to labor (employees), maintenance, operations, equipment, and any capital improvements or capacity expansions needed to provide continuous and adequate service.
When was the last time the water/wastewater rates were raised?
The City of Breckenridge contracted with a consultant to conduct a water/wastewater rate study in November of 2020. The results were presented in April 2021 and the City Commission took action to implement the rate increases in May of 2021, which was a series of rate increases over several years beginning in the October 2021.
I pay taxes. Why doesn't that pay for the water/wastewater service?
The taxes you pay on your property (ad valorem/property taxes) go into the General Fund and pays for general administration which includes services such as Police, Fire, Code Compliance, Building & Development, Parks & Recreation, and general administration.
Why are the water and wastewater improvements so expensive?
Water/wastewater is a capital-intensive business, from the cost of designing and engineering the system, to the cost of treatment plants materials and operation, equipment, water and wastewater pipes and the cost of construction. The cost of inflation over the last few years and the supply chain challenges has greatly impacted the cost of everything.
Another contributing factor is that the industry MUST comply with state and federal regulations, it is not optional. The City of Breckenridge is further impacted by a system that was built in the 1930’s – 1950’s because of the oil boom when the population exploded to 30,000. That means not only do we have aging infrastructure, but we also have infrastructure designed to serve a population of 30,000 which translates to lots of miles of water and wastewater lines, manholes, fire hydrants, and valves and now that population is only 5500.
How do our rates compare with cities around us and/or cities like us in size?
This kind of comparison is challenging and can be like comparing apples to oranges because there are too many variables that may not be equivalent. Every city is in a different stage of growth, may or may not purchase water at the same cost or may be entirely on well water and may be more spread out or more condensed geographically.
More information on the Water/Wastewater Rate Study is available here.