(Updated) Cullman County Water Dept. rates going up 10% Oct. 1

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David Haynes of St. John & Associates speaks to the commission at its work session prior to Tuesday's meeting. (Christy Perry for The Cullman Tribune)

Updated 9-25-19 at 3:51 p.m. (See statements from Cullman County Chairman Kenneth Walker and Cullman City Clerk Wes Moore at the bottom of this story.)

CULLMAN, Ala. – Cullman County Water Department customers will see a 10% increase in water rates beginning Oct. 1, 2019. The Cullman County Commission passed the rate increase at its meeting Tuesday morning. The commission also passed its FY2020 budget in the amount of $68,346,281.

The meeting room was also full as residents of County Road 319 turned out for a scheduled public hearing regarding vacating of a portion of the road’s cul de sac.

In the commission’s work session prior to the meeting, David Haynes of St. John & Associates addressed the commissioners and other county administrators on the topic of increased water rates.

Haynes said, based on a study of 2014-2018 data, “Our original recommendation would have been that a 7% increase in rates would have been implemented at the beginning of the fiscal year 2019. That time has come and gone and here we are at the fiscal year 2020. If we were to try to play catch-up for not implementing a rate increase in 2019, we would be implementing a 10% increase in 2020 to account for where we are today.”

Haynes also explained that a meter reading discrepancy resulted in the County owing the City of Cullman almost $925,000 that must be paid back.

He said, “The way we have forecast it is that it will be paid back in fiscal year 2020 over the course of the year. In order to maintain debt ratios and make up that $925,000 or so, you are looking at a 20% rate increase in this fiscal year.”

The commission agreed to vote on a 10% increase and added that to Tuesday morning’s agenda.

Haynes also spoke during the commission meeting, explaining, “The proposed rate increase of 10% is in response to a wholesale rate increase from the City of Cullman of 11.2% in the last fiscal year. We also have a forecasted rate increase from the City of Cullman of over 8% in the coming fiscal year. This 10% increase is relatively modest by comparison, and that is the basis of our recommendation.”

The commission voted to pass the 10% increase.

Commissioner Garry Marchman said in reference to the water contract the County entered into with the City of Cullman in 2010, “We’ve got to be able to budget with our water. Right now, they can say what they want to, and we’re stuck with it. We gotta change, folks. We gotta change it. Whether it’s a revision of that contract or whatever it is, someone has signed our death warrant with that.”

The commission also approved the County’s FY 2020 budget. The $68.35 million budget includes a $20.03 million general fund budget, $13.91 million for the water department, $12.17 million for sanitation and $10.58 million for the road department. The general fund budgeted revenue is projected at $22.84 million.

The largest portion of the general fund, $12.02 million, will go to the Cullman County Sheriff’s Office and Detention Center.

County employees will also see a 70-cent raise per step.

According to County Administrator Gary Teichmiller, “Raising each step by 70 cents, for 90% of the employees, this will be higher than a one step. What it does is brings our starting pay more in line with private and other municipalities and counties.”

Teichmiller said the budget also includes about $1.5 million to replace the whole HVAC system in the courthouse and repairs to the elevators for $300,000.

A public hearing was held concerning vacating a .05-acre portion of County Road 319. The petitioners, Alan Merz, Bill Whisenhunt and Ellesha Whisenhunt, were represented by attorney Champ Crocker.

Crocker addressed the commissioners, “We stand on our petition which states that this is not going to have an adverse effect on anyone else. Currently their house, their retaining wall, is encroaching on the road and that is a problem for them. It affects the marketability of their house and this is the best solution.”

Other residents of County Road 319 disagreed. Several spoke in opposition including Dr. Mark Farmer who raised concerns about taking away a portion of the cul de sac and large trucks being unable to navigate the road.

He said, “If you take away the third of the turnaround, we have no place for these trucks to turn around and it does pose a major problem. This petition only serves this family and not the community, and that’s our objection.”

The commission made no decision on County Road 319 at Tuesday’s meeting.

In other business

The commission took the following actions:

  • Set a public hearing to consider vacating a portion of Cullman County Road 597/ Nancy Street in the Gilleyville subdivision for Tuesday, Nov. 26, 2019 at 10 a.m.
  • Approved FY 2020 ACCA Worker’s Compensation Self Insurers Fund in the amount of $526,310 and the FY 2020 ACCA Liability Self-Insurance Fund in the amount of $395,726.
  • Approved the expansion of benefits provided through Mutual of Omaha (life, critical illness, short term and long-term disability insurance). Estimated cost of $217,193 annually and to be effective 1/1/2020.
  • Approved plan design changes for medical insurance through Blue Cross Blue Shield of Alabama and adjusted employee insurance contributions to offset ongoing increases in insurance costs. The 1% increase in employee contribution will bring an estimated savings of $519,037 annually and will go into effect 1/1/2020.
  • Approved expanding the county employee compensation plan to add military and education incentives if economically feasible. To be effective 1/1/2020.
  • Amended one item to correct an error in the minutes from the Aug. 27, 2019 commission meeting.
  • Authorized County Engineer John Lang to sign HSIP applications for County Roads 1114 and County Road 1301.
  • Approved Bid No. 1316 for motor oil, hydraulic oil, transmission fluid and grease to be awarded and split between McPhearson Oil and W.H. Thomas Oil.

The next commission meeting will be Oct. 8, 2019 at 10 a.m. in the commission meeting room.

Late Tuesday afternoon, Cullman County Commission Chairman Kenneth Walker released the following statement via Cullman County’s Facebook page:

During today’s regularly-scheduled Commission meeting, a slight rate increase was unanimously approved for customers of the #CullmanCounty Water Department. This rate increase was enacted in order to offset an unanticipated rise in the wholesale water rate from the City of Cullman Utilities Board. The rate increase from the City of Cullman amounts to an additional $0.41 / 1,000 gallons of water. This increase in cost translates to an additional $700,000 annually from Cullman County. Only a fraction of the cost of the increase is being along to the customers of the Cullman County Water Department. This rate adjustment came after a water rate study was conducted by St. John & Associates. The #Cullman County Commission remains committed to continuing to provide clean drinking water at reasonable prices for our customers.

Kenneth Walker, Chairman
Cullman County Commission

Wes Moore, Cullman city clerk, issued the following statement Wednesday afternoon:

The City of Cullman and Cullman County Commission have worked together for many years to provide safe clean drinking water to our customers and citizens.  The Cullman Water Treatment Plant has received the optimization award from ADEM and EPA for water quality 13 times since 2005 and has always been in compliance with water standards set by ADEM and EPA. 

The City of Cullman has an agreement with the Cullman Utilities Board to purchase all of the water produced by the Cullman Water Treatment Plant at the actual cost to provide the water and in turn the City of Cullman resells the water at cost to its wholesale customers which include the Cullman County Commission, the Walter Water Authority, the East Cullman Water System, the VAW Water System, and the Johnson’s Crossing Water System. 

The attorneys for the Cullman County Commission and the independent water systems actually formulated the current water sales agreement and presented the structure to the City of Cullman in the 1970s which was amended by all parties in 2010. 

Jimmy Knight was a key writer of the document and said more than 40 years ago that it was important to establish an agreement that ensured the county, the independent water systems, and the city shared equally in the cost of supplying and purifying water to meet the need of their customers and citizens.

Every system purchases water at the same price per 1,000 gallons.  The wholesale water rate is calculated and certified by an independent engineering firm each year after the City of Cullman’s financials are audited by an independent CPA firm.  The wholesale water rate is actually calculated by taking the previous year’s total operating cost plus debt service divided by the total gallons sold (in thousands). 

The current wholesale rate for fiscal year 2018-19 per thousand gallons of water is $4.07.  Every water system including the City of Cullman pays this same rate for water. 

The wholesale portion of the average customer’s water bill with usage of 3,000 gallons is $12.21 per month.  The last wholesale water rate increase of 41 cents per 1,000 gallons calculated by an independent engineer only adds a cost of $1.23 per month to the average water customer’s monthly bill with a usage of 3,000 gallons. 

Each water system determines their customers’ retail rates based on their individual cost of operation including storage, distribution, billing, personnel and other expenses. 

The City of Cullman and Cullman County work together to provide quality drinking water to our customers at the lowest cost possible while still maintaining our water reservoirs, water treatment plant, distribution mains, water tanks, water lines, and pump stations. 

Wes Moore

Cullman City Clerk

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