Countdown to the Morgan City Utility Rate Hike?

by: Howard J. Castay, Jr.
(from the Tri-Parish Times)

A measure to hike utility bills an average of $20 monthly in Morgan City is drawing fire from city officials.

Mayor Tim Matte's proposal, which will be decided at the city council's Aug. 25 meeting, could have residents and business owners digging deeper in their pocketbook beginning Sept. 1 to pay utility bills.

The money, the mayor contends, is needed to offset Morgan City's 9 percent drop in sales tax collections. Funding the city's police and fire departments, utility work crews, retirement and worker's compensation insurance for city employees with the current budget has become a nightmare, Matte said.

At the city council's July 28 meeting, Matte unveiled a proposal to increase utility bills across the board. The measure would cost residential customers, on average, an additional $20 per month, or $240 annually, he said. Businesses could expect to pay double that - $40 monthly or $480 annually, according to the proposal.

In the week since Matte pitched the idea, officials remain split on the move.

Bill Cefalu, the city's director of utilities, said the rate hike on electricity is long overdue. Morgan City last raised electricity rates in the mid-1970s.The mayor's $20 monthly estimate for residential users, however, may be high, according to Cefalu. He predicts the hike will amount to just over 5 percent.

Regardless of the percentage, St. Mary Parish Councilman Kevin Voisin, who represents Morgan City, is adamantly opposed to a hike."I'm against raising utilities, period," he said. "The city's timing of (the proposed hike) with the downturn in the national and local economies couldn't be worse."

Advocating for Morgan City's senior citizen and low-income population, Voisin said a utility hike could create an undue hardship for citizens."Right now, many of our elderly are choosing between eating and buying their medicine," he argued. "Ten, 20 dollars, whatever it is more a month, it's going to put a hardship on them and I'm against that."

Voisin is questioning how city leaders have spent excess sales tax revenue collected since 2005. Across the region, sales tax collections spiked after Hurricane Katrina thrashed the area. "I think the city needs to do some belt tightening," he said.

According to figures provided by Matte, Morgan City's sales tax receipts indicate $3.349 million in revenues were collected in 2006. The figure rose to $3.525 million in 2007, and fell slightly to $3.501 million in 2008. During the first six months of this year, $1.702 million has been collected.

Last year, the city spent $1.717 million on its utility payroll, a significant jump from past years.

Matte said the city paid $1.102 million in 2001. In addition, the city paid UtiliServe Inc. of Monroe $137,000 to read users' electric meters after reliable local workers couldn't be found to do the work.

Matte said the city's budget includes $144,000 for UtiliServe Inc. to do the job this year.Morgan City's utility payroll includes 43 city workers - 10 assigned to administration, 11 in the electric department and 32 in gas, water, wastewater and sewage. The figures include workmen's compensation insurance costs, "which have skyrocketed," Matte said. "We've really been hit hard in this area."The city experienced a $1.39 million loss last year in garbage and sanitation costs. "We're losing money to tipping fees, which keep going up and up," the mayor said.

"The city needs an increase in population or in new economic development projects in order to continue to maintain our current level of service." Raising utility rates, he said, would delay shortening the work week or, even less palatable, laying off city employees. "That would curtail us from providing the best service that we can to our residents," Matte explained.

But Matte's utilities director said the concept is needed "simply because it's long overdue."

According to Cefalu, other electric companies are legally allowed to raise rates as needed.
"We can't according to the city charter," he said. "I think if the city council would have seen the need way back when, they would have realized that there needs to be an annual evaluation of our rates on electricity as well as water and gas. Perhaps, maybe then, we would not be in the shape we're in."

During his tenure as utilities director, Cefalu said his staffers have battled aging vehicles and equipment to do their job. "Some of my work crews are driving trucks that are at least 30 years old," he said. "Our tools and machinery... it's all just old."

Matte concedes that the timing of a rate hike is unfortunate given the current economic climate. "It's never a good time for a rate increase," he admitted. But long-term plans to fight the city's shrinking city utility fund are in short supply.

Raising sales taxes, he said, is not an option. "I've always been opposed to any sales tax increases. The problem is not so much what we're collecting," he said, noting that many residents leave the parish to shop, depriving Morgan City of much-needed sales tax collections.

"We need to get our residents to shop here more," the mayor said. "That would raise our sales tax revenue. So many of our folks live here but work out of the area and, therefore, spend money elsewhere due to convenience."

Since 1951, Morgan City has relied on utility payments to fund city police and fire budgets and pay public work crews. Dr. Charles Russell Brownell, who held the office for 32 years, operated the city's first budget that way.

During his four terms as mayor, this is the first utility rate hike proposed by Matte.

The last time a Morgan City utility was raised was under Tim Tregle's administration in 2003. The city council approved his request to raise water collection rates.

When asked about the across-the-board hike proposed by Matte, Tregle refused comment.Payroll totals during Tregle's administration, however, were far lower, according to sales tax numbers between 2001 and 2004.

In 2001, Morgan City's employee payroll was $1.102 million. It increased each subsequent year: $1.296 million in 2002; $2.375 million in 2003; and $1.501 million in 2004.

The city budget peaked during Tregle's last year in office at $2.310 million. When Matte was elected in 2005, employee payroll was $1.597 million.

It climbed to $1.679 million in 2006; $1.654 million in 2007; and $1.717 million last year.

Prior to Tregle's term, Morgan City last approved a garbage rate hike in the late 1980s during Mayor Cederic Lafleur's term.

A longtime proponent of government consolidation, Lafleur said in a previous interview with the Tri-Parish Times that economic development will determine Morgan City's fate.

By consolidating with St. Mary Parish's government, Lafleur said Morgan City could better position itself to survive in the long haul."We've got to consolidate with the other two cities on the east end of the parish and, maybe, with the two cities on the west end as well," he said.

"No one wants to hear this."Government consolidation," he added, "look at what it has done for Terrebonne."Because of land availability, Houma quickly developed into a regional shopping mecca.

"No one here (in Morgan City) wants to give up their property and no one in other cities - Berwick and Patterson - wants to give up their area to a consolidated government," LaFleur explained.

"So what do you do?" he asked. "Houma works because it is at a crossroads," he said. "Thibodaux works because of Nicholls and the hospital."

Matte understands LaFleur's reasoning. Economic development, he agreed, is critical to offset dropping sales tax collections."I think the other cities don't want to discuss this simply because they feel their identity would be lost," he said. "Also, people might see that as a take-over."