A second proposal for increased water, sewer and garbage rates in Temple must be considered before a new budget can be approved by the City Council.

A month into the new fiscal year, Temple is still operating on last year’s budget because the proposed budget is tied to the increased rates. A rate increase presented earlier this month was tabled after public outcry against it, which forced the City Council to also table the budget until a compromise could be reached.

According to city officials, the new rates are meant to fund the $600,000 annual bond payment on the $8 million borrowed to build the city’s sewer plant. When it was built seven years ago, officials had counted on new taps from construction to fund the bond payments. But with construction at a standstill they are forced to look elsewhere or fund the payments out of reserves that would quickly dry up.

“Currently, water and sewer is not self-sufficient and it’s not generating enough revenues to pay the bond payments on it,” City Attorney Cynthia Daley said last week. “According to the auditors, that fund should be, must be, self-sufficient.”

A public hearing held Monday brought out many customers, many of those commercial customers who threatened to discontinue water service or go out of business if the burden becomes too much. Seven rate increase options were presented to the public, but only one will be put to a vote at the council’s Feb. 1 meeting.

Unlike the proposal made earlier this month in which meter size would dictate much of the increases, the option that will likely be presented for approval is based more on usage.

Under the proposal, residential customers using up to 2,000 gallons of water per month would see a $2 increase in their rates for both water and sewer. Usage between 2,001 and 7,000 gallons would increase from $3.85 to $5.50 per 1,000 gallons on the water side and from $4.85 to $5.50 on the sewer side. Usage between 7,001 and 10,000 gallons would increase from $3.85 per 1,000 gallons to $6 for water and $5.50 for sewer. Usage over 10,000 gallons would cost $6.50 per 1,000 gallons for water and $6 for sewer.

On the commercial side, those few customers using less than 2,000 gallons would see an increase from $10 to $15 for both water and sewer. Between 2,001 and 15,000 gallons, customers would pay $6 for both water and sewer per 1,000 gallons used. From 15,001 to 50,000, commercial customers would pay $5.50 per 1,000 gallons for both water and sewer, and usage of more than 50,000 would cost $7 per 1,000 gallons used for both water and sewer.

Garbage rates would also increase across the board by $1 per customer, from $10,50 to $11.50. The city is also considering making it mandatory for those requiring garbage service to use the city’s contractor as an additional revenue source.

According to the city’s estimates, the new water and sewer rates would provide an additional $315,698 in revenues. When added to garbage revenues of $197,500, city officials said they would only fall about $73,500 short of the annual bond payment for the sewer plant bond payment in the first year. That shortage would be paid out of reserves, but city officials believe once construction picks up the fund would eventually become self-sufficient.

“In five years, I believe we’d be self-sufficient,” City Administrator Kim Pope said.

Overall, the city’s budget process this year has been a difficult one with the economy causing revenues to dip dramatically. To balance the budget, city officials have cut out employee raises, reduced by half the city’s portion of health care for employee dependents, disposed of air cards used by police, eliminated a $50 payment for City Council committee chairs and reduced building repair maintenance for police by $10,000. Officials are also looking to eliminate city cell phone usage by non-essential employees.

“We’re mandated by state law to have a balanced budget, so because of the downturn we’re really having to sharpen our pencils,” Mayor Rick Ford said. “We’ve been meeting with the department heads since November trying to identify areas we can cut. We feel like we’re down to bare bones at this point.”