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Regular City Council Meeting Monday,November 25, 2013 Page 20 Regarding whether to consider the utility rates as part of the December 2 and De- cember 9, 2013 budget discussions, Mayor Roe sought individual Councilmember input as to their preference. Councilmember McGehee opined that, having gone through the process for in- creasing the base fee 62% over the last two years, she was personally disappoint- ed to see this staff recommendation for another 4.65% increase on top of that when the water usage fee only increased by ninety cents. Councilmember McGe- hee questioned if this was what should be anticipated annually going forward; a 3% operating cost plus increases for water charges. Finance Director Miller opined that it was a great question. Mr. Miller noted that staff performed rate analyses annually, and while not a perfect science, the base rate had been phased over two years, but intentionally did not include an inflation factor. Mr. Miller noted that the long-term CIP was a fluid situation; and the methodology used and the policy or philosophy for infrastructure replacement may change, those big increases were most likely behind the City; and he ex- pected only inflationary costs moving forward unless that philosophy was re- placed moving forward. However, based on those inflationary costs and varia- bles, Mr. Miller anticipated similar annual increases. At the request of Mayor Roe, Mr. Miller addressed the most significant increase that of the water base fee. Mr. Miller advised that this came to approximately $5 increase per quarter or 10%. Mr. Miller noted that there were two things driving that: the lack of including inflation for the years 2012 and 2013, and the City Council's choice to freeze the 2013 rate at the 2012 rate, resulting in approximate- ly 6% of the total 10% increase. Mr. Miller advised that the remaining 4% of the increase was due changes in the 20-year CIP schedule, with more assets for re- placement at the end of their life cycle, new technologies, and analysis of the wa- ter tower rehabilitation indicating a higher cost than estimated several years ago. Mr. Miller noted that, as assets came closer to replacement, more refined costs were available; but could also serve to increase the base fee as indicated, as well as some going down, or staying the same. As an example, Mr. Miller noted that the sanitary sewer base fee remained unchanged for 2014; and expressed hope that this served to offset some of the other increases. Mr. Miller reiterated the fact that this is not a perfect science from one year to the next; and recognized that there had been some large increase recently as the sustainability of the City's in- frastructure was addressed. Mr. Miller stated that he was aware that the City Council, nor staff, took that lightly; however, he encouraged them to stay on track. Councilmember McGehee, while having no argument with staff's proposal, reit- erated her rationale in a larger policy discussion to address this issue; and see if there was a better way to even things out. Councilmember McGehee opined that