A reportedly tight financial state has forced the city of Demorest to hike its water/sewer rates for the second time this year.
The latest 20% increase in water and sewer rates was approved in early-September and took effect Oct. 1.
Take a look at the new rates here.
At a Sept. 3 work session, officials reviewed city finances for the last seven months and deemed the rate hike necessary for Demorest to maintain its current levels of service.
Like other municipalities, inflation and higher employee salaries account for greater overall expenses in Demorest, according to certified public accountant Alan Burton, who identified salaries as $81,000 higher than anticipated this year.
The city of Demorest also has seen a growing demand for water as well as continual increases in costs for supplies, chemicals and outside labor.
“Obviously, you’re spending quite a bit more than we budgeted,” Burton said at a work session in September. “…when you do the budget this year, look at those numbers pretty closely.”
Without transfers from the water fund, according to Burton, the city’s general fund would be “in the hole” by around $800,000. Burton called water an essential component to the city’s long-term financial health.
“(With) the smaller population as (Demorest) has, and (not increasing) property taxes and things of that nature, I just don’t see how you could ever be very profitable on the general fund side,” he told council members. “You need to make it where you can make it – and that’s in water.”
City Engineer and President of Engineering Management Inc. Fletcher Holliday also delivered a presentation on the state of Demorest’s water fund at September’s work session.
Holliday said that lower revenue, coupled with higher expenses and a greater demand for water, could cause the city to experience a total deficit of $600,000 without the recent hikes.
“In July, the city had issues keeping up with demand and keeping water tanks full,” Holliday said. “This is because of the smaller lines the city has in its distribution system and difficulty in trying to supply enough water from one end of the county to the other…(this) has required Demorest to purchase more water from the city of Toccoa than was anticipated. That rate is considerably more than the city is paying Baldwin (for water).”
In deferring numerous water/sewer infrastructure-related capital projects, Demorest City Manager Mark Musselwhite said the city has cut around $600,000 in response to rising costs.
Council members had budgeted for these items, Musselwhite said, but with “so many increases,” the city “could not keep up with the cost without making the cuts.”
“Inflation – I know we all hear it and we all feel it – is a real situation,” Musslewhite said. “To repave a street, it’s $180,000 for a mile. You’re not going to get very many miles with those kinds of numbers…it is not an easy thing to sit here and say we need a 20% increase.”
Demorest has a total of 7,200 water customers inside and outside of city limits.
Water purchases
Demorest relies heavily on the cities of Toccoa and Baldwin for its water supply.
Under current purchase agreements, Demorest purchases a fixed monthly amount of 48,000,000 gallons from Baldwin at a baseline cost of $85,905 a month.
City documents state that Demorest doesn’t use the full amount of water purchased from the two municipalities for about six months of the year. Demorest also purchases 6,000,000 gallons from Toccoa ($3.39 per 1,000 gallons of water) per month.
“For any of that (water) to come out, it has to run through a meter that (Demorest) and (the other city) agree to,” Musselwhite explained. “…if (Demorest) only takes 1.5 million (gallons), I got $500,000 sitting on their side that (Demorest) didn’t use.”
