Kitchener water rates could increase 8%, says finance chair

Kitchener residents are likely facing another significant hike in water rates next year, says the city's finance chair in response to a new staff report that indicates the utility is running a deficit that's $1.1 million higher than anticipated.

The financial variance report assesses the state of the city's finances relative to the 2015 budget. It will be presented to council on Monday, and says the deficit for the water utility stands at $1.6 million, up from the projected water deficit of $449,000.

Our tax system isn't really set up in a way that we can put more money towards this because our taxes are based entirely on the value of a home.- Coun. Scott Davey, finance chair

"It was worse than I expected, but by the same sentiment I was actually expecting it to be pretty bad," said city councillor and finance chair Scott Davey.

Davey said during last budget deliberations councillors made the "difficult" decision of raising water rates by 9.9 per cent, costing taxpayers an additional $92 a year.

Based on the current deficit, Davey said residents could be looking at a raise of 8 per cent next year, which amounts to about $81.70 more a year on homeowners' water bills.

"You can't cut corners when it comes to your drinking water. We know that costs are going to go up significantly in the future," said Davey.

The city's aging water infrastructure has been hard hit in the past two years, with particularly harsh winters cracking water mains across the city. Davey said it costs roughly $15,000 every time a water main breaks.

"The problem is that a lot of the pipes were projected ... to be able to last upwards of 70 or 80 years when they were put in back in the 40s and 50s. But we're seeing them fail much earlier than that, when they're only 40 and 50 years old, which wasn't projected, which puts us even further behind," said Davey.

"The problem there is the repair is like plugging at a dam, versus replacing the dam, which is what we need to do. So every time we do a repair it takes money away from the length of water main that we can actually replace going forward. All municipalities are facing this issue."

The city has a reserve fund for water, but it was completely wiped out last year when the city had to pay off more than $5 million in water and sanitary deficits. It's also facing a decline in revenue from the utility because water consumption has been declining over the past decade despite population growth.

Davey said the city is reviewing its policies on pay per use water billing.

"We've seen a lot of other municipalities move away from water usage versus a fixed cost. We've found what it does in some respects is punish large families for example who have to have a lot more water consumption, even though the cost to service them is lower than what they're paying," said Davey.

With expensive repairs in the past two winters, depleted reserve funds, declining revenues and a growing need for new water infrastructure, Davey said senior levels of government need to step up funding.

"There's been large pushes over the last few years because municipalities only get I think it's eight cents of every dollar and they're responsible for the majority of the infrastructure in the country," said Davey.

"We're appealing for the province and federal government to say, 'Hey, you know, our tax system isn't really set up in a way that we can put more money towards this because our taxes are based entirely on the value of a home, versus the ability to tax people that are more able to afford it at an income tax level,'" he said.

"Our position has always been, we need help, we need help to address this and it's not just Kitchener, it's pretty much every municipality across the country."