The Rollingwood City Council voted unanimously last week to raise water rates by 8 percent and wastewater rates by 6 percent, with the possibility of more to come, at last week’s regularly scheduled meeting.

“On the water fund, we are $45,000 in the hole in a $600,000 budget after one month,” Alderman John Hinton said. “That means we have to raise rates.”

City officials on the council and the utility commission have been discussing the need to raise rates in recent meetings, as the City of Austin passed down a rate increase of 5.7 percent for water and 4.7 for wastewater. Those changes went into effect Nov. 1, meaning that Rollingwood has been charging the residents less for services than Austin has been charging the city.

According to a letter sent out by the city this week, the average customer’s water bill will go up from $150 to $162 and wasterwater rates would go up to $5.95 from $5.61 per 1,000 gallons.

In addition to needing to cover last month’s deficit, a study by the contracted engineering firm HDR, said that Rollingwood would need to raise rates by up to 16 percent for water and 5.2 percent for wastewater.

The model for fiscal year 2010 [for the water fund] assumes a lower consumption per unit rate than 2009 to model a wetter year and conservation effects,” said HDR engineer Grady Reed in a telephone interview. “That produces about a $40,000 swing. When we re-look at it and honestly, I don’t think that needs to be done.”

While council members mentioned at the meeting that overhead has gone up, which it has over the past three years, but actually went down from last year, they did not mention the calculation for a wetter year.

For the past two, very dry, fiscal years, the water and wastewater funds have pulled in higher than expected revenues. This money does not stay in those funds, but goes into a capital improvement fund.

Hinton said that in the continued discussions about rates, the council would review their rate philosophy in general, which depends on high consumption. One of the ideas he suggested involved a rate stabilization fund, which would draw money on dry years and give money on wet years to prevent large rate hikes like those currently being discussed.

“What we’re doing right now is what we’ve historically done in the past,” former Utility Commission Chairman John Hinton said. “We’ve always operated under this more short-term orientation than the long term. We’ve always tried to not lose money in our utility funds, not have a negative figure year.”

The wastewater fund operates in a slightly different manner however, with a base fee of $65 that goes directly toward repaying the LCRA for the wastewater system infrastructure. The new hikes will not affect this rate.

Both new rates will go into effect as soon as possible and likely show up on the December bill, Mayor Dale Dingley said.

While council members had discussed raising the rates to the full, originally recommended, 16 percent at the meeting, with support from audience members, they decided to keep the hikes in the single digits pending further discussion.

“The best thing that would stop us from hemorrhaging is just passing it through to the 16,” Barry Bone told the council. “If you don’t do it right now, the problem is going to get worse every month.”

In addition to the rate stabilization fund, council members discussed the possibility of several different rate structures, some which would give businesses a break and some that would give residents a break. They eventually agreed that the flat rate across the board, which was slightly higher than the City of Austin pass-through rates, would leave the cushion and time to discuss these issues further.