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2 <br />mitigated somewhat, and there would also be a financial incentive to use less than 3000 gallons <br />per month. <br />Example 1. General Fund Subsidy eliminated this year <br />A customer who uses 2,000 gallons per month now pays $15.20 per month. <br />Given the increase above, that same customer's bill would have a base charge <br />of $20.73 and a usage charge of $18.00 per 1,000 gallons, for a total bill of <br />$56.73 per month (273% increase). A customer that typically uses 6,000 gallons <br />per month currently pays $28.70. Given the scenario above, this would increase <br />to $128.73 per month (348% increase). <br />If the rates are not changed at all, the expected General Fund contribution that would be <br />required this fiscal year would be approximately $142,000, without including any funding for <br />capital projects that are known to be required in the future. The capital project funding, which is <br />required as part of our state issued collection system permit, would be approximately $50,000 <br />per year for the next ten years. This makes the total General Fund Contribution about <br />$192,000 for the upcoming fiscal year. This total subsidy amount would increase as the <br />number of customers and the size of the system increase in future years. <br />This year, in anticipation of BOCC implementation of a new rate schedule, the General Fund <br />contribution to the system's budget was reduced by $40,000. To make up for this budget <br />reduction, the rates would need to be increased an average of 150% this year. This percentage <br />increase is derived from the assumption that the rates would not be raised until the January <br />billing cycle at the earliest, giving only six months to generate the revenue necessary. If <br />implementation of a new rate structure were to be delayed beyond that time, then the <br />percentage would need to be increased. In addition, the 150% increase would serve only to <br />bridge the gap between the system's requested .budget and the approved budget. Capital <br />needs funding and establishment of a fund balance for the system are not included in <br />calculation of the 150% increase. In order to eliminate the General Fund subsidy entirely, the <br />BOCC could establish a schedule by which rates are increased steadily each subsequent year <br />until the system is fully funded. <br />Example 2. Rates increased to make up for reduction in operating budget. <br />With a 150% increase, the 2,000 gallon customer from the above example would have a <br />monthly bill of $35.46 (Base Charge: $12.96 + $11.25 per 1,000 gallons which results in <br />a 133% increase) and the 6,000 gallon per month customer would have a monthly bill of <br />$80.46 (Base Charge: $12.96 + $11.25 per 1,000 gallons which results in a 180% <br />increase). <br />None of the discussion so far takes into account the impacts to low income residents who may <br />find the increased rates onerous. As has been mentioned before and is included in the <br />attached memo from County Engineer Paul Thames to the County Manager, the BOCC may <br />elect to create a "safety net" fund that could be administered by one of the County's social <br />service agencies. This fund could be made available to customers after they meet some fixed <br />income related criteria as determined appropriate by the administering agency. The safety net <br />fund would pay into the Sewer Fund on behalf of qualified customers, thereby reducing their <br />sewer bill. The costs and scenarios mentioned in the previous paragraphs do not take the costs <br />of such a fund into account. Additionally, there is no reliable way to calculate the effect that <br />much higher sewer rates will have on consumption (and therefore, revenue). The increased <br />