City Council wants more data before looking at water rates

City Council members want to look at suggestions for water rate increases — but not until a separate citywide departmental assessment is complete.

The council, acting in its capacity as the Lawton Water Authority, received a synopsis Tuesday of a water and wastewater study recently completed by Freese and Nichols, a document commissioned by the council/authority in 2023 to analyze water and sewer systems, operations and charges. The goal was to make recommendations on specific issues, including how to overcome funding problems that don’t allow the City of Lawton to keep pace with water and sewer improvements; and potential rate increases.

“Our rates just barely cover what we need to do,” Public Utilities Director Rusty Whisenhunt said, explaining the problem occurs as city administrators continue a long-standing tradition of transferring money out of the Enterprise Fund to support the General Fund.

The Enterprise Fund is where revenue created by water, sewer and refuse charges are deposited, while the General Fund contains revenues that support general city operations. In theory, utility revenue is used to maintain and operate the utility systems (water, sewer, refuse), Whisenhunt said, adding that transferring revenue to the General Fund “is the problem.”

That’s why one of Freese and Nichols’ recommendations is to transfer fewer Enterprise dollars to the General Fund, which would make those revenues available for water/sewer upgrades. Ward 4 Councilman George Gill said the simple solution is transferring less money out, which would mean the council wouldn’t have to raise water and sewer rates to provide sufficient revenues.

Whisenhunt said the first priority of the Enterprise Fund should be to take care of the water and sewer systems. But, under today’s rates, Lawton dedicates the fewest dollars to its utility systems, when compared with peer cities (the next closest is Norman, which is $14 higher).

Mayor Stan Booker said keeping those funds in the Enterprise Fund to take care of maintenance would ultimately mean fewer waterline breaks to deal with each year. But, he also said the council/authority needs a full range of data before it makes any decisions, so his recommendation is to wait until the efficiency study is presented. Booker said without that information, the council “can’t look people in the eye and raise (water) rates.”

“We need to wait and let people see what we’re delivering,” he said.

Whisenhunt is among those who say the solution may be a combination: rather than just raise water rates, the city could raise rates and transfer fewer dollars to the General Fund, which would mean a lesser rate increase. It means ending a long-standing practice of transferring funds to help balance the General Fund, a policy that dates back decades but which also has increased in recent years (by $2 million, to $15.7 million, between Fiscal Year 2024 and Fiscal Year 2026).

If the council/authority adopts the increases cited in the study, it would mean $4.20 more per month for Lawton residential water customers who use 6,000 gallons of water, about $50.04 per year. The new rates keep the base rate (charge for the first 2,000 gallons) the same, but increase the per-1,000-gallons charge over the next five years. The result for those who use 6,000 gallons of water a month would be $52.45 for water (now $50.25 for water usage and the Waurika surcharge) and $28.75 for sewer (now $26.75 for use and sewer rehab fee) in the fiscal year that begins July 1.

It won’t be just residential customers inside the city limits: the study recommends an increase in the per-1,000-gallon rate for all user categories.

The study states that if its funding solutions are followed, the result could fund $700 million of capital upgrades/replacements in the next 20 years, including 350 miles of water main, 150 miles of sewer main and Phase II upgrades at the wastewater treatment plant.

Freese and Nichols also recommended the city evaluate water customer classes to align classes based on their use; audit bill data to ensure water customers are properly classified; monitor water loss; and create an industrial user rate.