Yelm Public Works Director Advises Council Against Immediate Reductions in Rates Due to COVID-19 Crisis

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As the city of Yelm works with its ratepayers and customers during the financial uncertainty that has come about due to the ongoing coronavirus crisis, the city council is considering additional action to temporarily lower the city’s water and sewer rates to further assist residents.

Discussion was had on the subject at the Yelm City Council’s April 7 study session, during which council members voiced differing opinions on moving forward with a measure with financial uncertainty on the city’s side.

Interim Public Works Director Stephen Clark said he would caution the council against lowering rates, especially during the early stages of the overarching national crisis.

The week prior to the meeting, at a regular business meeting, council member Joe DePinto made the suggestion to lower water and sewer rates by roughly 90 percent of what they currently are.

His suggestion, which received a warm response from other members at the meeting, came just after the council passed two ordinances that gives ratepayers the ability to work with the city for the next year if they need to defer water or sewer payments or pay over time.

So far, one customer has utilized the payment deferment option, City Administrator Michael Grayum said.

“At this point, I’d caution you very much so to not reduce the rates, but to look at this thing over a longer haul and get the analysis in terms of what the rate impacts are,” Clark said at the April 7 meeting. “We at the Public Works Department will do our utmost to see if in fact this drags on, where we could make some substantive cuts to lessen any rate increases and bring about some cost savings.”

He added that he felt slashing rates temporarily, even by as little as 25 percent at this point in time, it would be too premature.

The city’s financial department over the next 30 days will work to bring forward a more detailed plan on what temporary rate decreases could mean for the city’s financial health.

“Having looked at the rates for the last six months or so, and looking at the maintenance and operation, I will tell you that it’s not a big, rich enterprise. Most of these revenues that you generate in are basically covering costs with some set aside for major emergencies, and some set aside for capital projects and the like,” Clark said of the Public Works revenue.

Last month, the city council approved a $1.89 million design agreement to move forward with a $22.2 million fix for the aging wastewater reclamation facility. Over the coming months, the city will be looking for external revenue sources to help pay for the project, which could be tricky if the state’s economy continues to weaken due to state-mandated closures.

Yelm Mayor JW Foster said that he hasn’t noticed any other municipalities cutting their water or sewer rates due to the crisis, but noted that other businesses and municipalities have been working on a case-by-case basis with customers.

He also said that there’s the aspect of what state and federal governments are contributing to the ongoing struggle felt by Americans.

“The good news is that this is a very temporary situation that we will recover from,” Foster said after the meeting. “Everything still stands, and here’s the best part; the human beings that survive this will recover and go back to work to repair our economy.”

DePinto said many residents and business owners have been reaching out to him saying they’re in need of financial help due to the coronavirus crisis.

“I don’t want to make any rash decisions,” DePinto said about potential decreases in rates. “We shouldn’t be making quick decisions with just our guts, but we should be making these decisions after we have these numbers and that’s what we’re asking for. We’re not asking to cut rates right now, we’re having that conversation.”

The council also received a general overview on what the financial impacts of the coronavirus crisis could mean for the city. For now, with many more questions on the horizon, the city has put a hold on travel and has suspended all hiring (except for the ongoing efforts to hire a public works director).

The city also plans on establishing a long-term revenue forecast to see what extent the coronavirus crisis could have on the city, according to a presentation from Grayum.

Staff will also look at reducing expenditures.

The bulk of the city’s general fund revenues come from three sources: property taxes, sales and use taxes, and B&O and utility taxes. They make up about 79 percent of that fund’s revenue.

City leaders are concerned that due to the immediate and long-term spending habits of residents and businesses, those revenue sources could be severely impacted.

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