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Buda utility rates rising

A combined five percent rate hike for Buda utility customers could be forthcoming as city leaders contemplate looming infrastructure upgrades.

While the cost of Buda water and wastewater could go up by two and three percent this fiscal year, respectively, officials believe rates could get much higher in the near future.

Kenneth Williams, Buda city manager, said during a budget workshop Aug. 7 that most of the cost increases in water rates stem from new supply sources the city is obtaining.

One of those is the Alliance Regional Water Authority’s $215 million pipeline project, which will provide 15,000 acre-feet of water from the Carrizo-Wilcox aquifer to its member entities, including Buda. Earlier this year, Buda, along with Kyle and San Marcos, approved the first of three phases of bonds meant to cover the cost of the project.

Buda gave the green light to roughly $1.6 million of the expected $10 million toward the ARWA project.

Wastewater rate increases, which will mean a $2 to $3 per jump in the average monthly bill for residents, will go toward debt issued for Buda’s wastewater treatment plant expansion. In December 2017, Buda issued a $20.3 million certificate of obligation (CO) bond to expand the capacity of the WWTP from 1.5 million gallons per day to 3.5 million.

The rate increases are also expected to help boost the city’s water and wastewater fund reserves to absorb the impact of expenses in the future.

According to the FY19 projected budget, Buda plans to spend roughly $60,000 less than what it generates in water revenue, but will have a $1.18 million overrun in the wastewater fund.

But that also means utility customers could have rates rise by as much as 10 to 15 percent over the course of the next three fiscal years. Future projections, however, are not fixed and could change over time.

“The larger numbers in the future, they might happen or might not increase,” Williams said. “This project’s conservative, but in the future, we could be looking at steep increases.”

Buda Mayor George Haehn said the city’s utility rate increases will go toward the “huge investments” in ARWA and the WWTP, along with improving connectivity in the city.

Evan Ture, Buda City Council Place 6, said Buda’s rate increases are comparable to neighboring communities. Buda’s proposed utility rates would be only surpassed by the current rates in Hutto, Austin, San Marcos and Taylor.

“Bear with us for the rate increases for the next few years and we should balance out,” Ture said.

Overall, Williams said the city has a “good financial plan” that he believes will accommodate the city’s estimated 16,000-plus residents.

Buda’s proposed budget calls for a .0037 cent increase in the current property tax rate, bringing it to .3710 per $100 valuation. Williams said the primary cause for the increase is a slight rise in the debt service, or interest and sinking (I&S), rate.

Municipalities craft property tax rates on the maintenance and operations (M&O) and interest and sinking (I&S).

Buda’s proposed property tax rate will be roughly two cents lower than what was projected when voters approved the 2014 bonds, Williams said. The average Buda household, estimated at a value of $255,745, can expect to pay $60 more in property taxes than last year.

Buda’s tax rate would also go toward covering eight new full-time positions, including two additional patrol officers for the Buda Police Department, as well as a two percent cost-of-living increase for employees.

Williams said the city will also continue to work on Propositions 3, 4 and 5 of the 2014 bond this fiscal year, as well as roughly $3 million in capital improvement projects.

“We fought to keep taxes as low as possible,” Haehn said. “I’m happy to find we are below what was estimated.”

The Buda City Council will hold the first public hearings on the tax rate and budget on Aug. 21. A second public hearing on the budget and tax rate will be Sept.4

Buda city leaders could decide on the budget by Sept. 18.

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