OMW Municipal Law Blog

Many small cities (and towns) are struggling economically and finding it difficult to operate in our current economic climate.  Cities, both big and small, are suffering from reduced sales tax revenues.  The slowdown in the real estate market has led to reduced revenues from real estate excise taxes.  How can a city or town survive? 

One answer may be found by re-examining the current rates and charges imposed by the city utilities, particularly water and sewer.  The provision of water and sewer services by a city is a classic municipal function.  After the city has explored all other methods of reducing costs, including fully evaluating whether staffing level changes are necessary, the city should examine what it truly costs to operate its water or sewer system and make sure it is recouping all of its costs through the rates and charges to customers located both inside, and to the extent they exist, outside of the city.  It may be that it is time to re-evaluate what the rates and charges should be for those receiving these city utility services.  Similar statutes for setting water and sewer rates provide that, in classifying city utility customers, among other reasonable grounds for distinction, the city may examine the following factors: 

            •           The difference in cost of providing the service to the customers.

            •           Whether the customers are located within or outside of the city.

            •           The difference in maintenance, operation, and repair associated with the parts of the system serving the class of customer.

Other specific factors are identified for water and sewer systems in RCW 35.92.010 and RCW 35.67.190, respectively.  (more…)