City manager proposes major increase in CIP work
Council gives tentative OK to raising funding for streets, water, sewer and drainage improvements
Kerry Craig | News-Telegram Assistant Editor

Aug. 3, 2006 -- Sulphur Springs City Council members Tuesday night gave tentative approval to a proposal from City Manager Marc Maxwell for a significant increase in funding for the city's Capital Improvements Program to upgrade sewer and water lines, as well as street and drainage programs.

The increase, from $1.8 million last year to about $4 million, would enable the replacement of more sewer and water lines along with the paving of more miles of city streets each year and more improvements to the city drainage system.

Maxwell told the council CIP has been underfunded since its inception 10 years ago, but said the coming budget year may present an opportunity to take a major step toward fully funding the program without an increase in taxes.

There are four components to Sulphur Springs' Capital Improvements Plan: Streets, drainage, sewer and water.

To have fully funded a streets program nine years ago, CIP would have required $2 million per year, which, Maxwell said, would have placed too great a burden on taxpayers and only paved two miles of city streets each year.

Rather than raise the tax rate, that City Council chose to fund the program at the rate of $1 million per year.

To attempt to fully fund the same plan today would cost more than $2.5 million when taking into account the increases attributed to inflation and costs of materials.

As a result of the underfunding, the city began diverting some street construction funds to street maintenance and began using a "plant mix" overlay on streets, giving the streets a new, smooth surface.

There were two main issues in initiating CIP. First was funding the plan at a rate that matches the rate of deterioration of city streets, sewer lines, water lines and the drainage system.  The other issue saw the city starting the program well behind the curve because little work had been done in any of the areas.

Work on the city's sewer system has been, and will continue to be, a major focus of the CIP because of regulatory issues with the Environmental Protection Agency.

Each year the program has dedicated more than $450,000 to sewer projects to just stay ahead of the federal agency, and Maxwell told the council the effort would need to continue for a number of years.

Sewer work over the past five years has been funded with a $2.5 million bond, and the city manager said another $2.5 million bond needs to be issued this year. It is something the city has been planning for some time, he said.

The city has been replacing water lines at about half the rate of sewer line replacement, but Maxwell said funding for water line replacement is in need of an upgrade.

Even though the increased funding is needed, he said, the primary need is to keep the EPA happy with the sewer program.

In addressing the drainage program, Maxwell said the city has never done a study to assess drainage needs, but more than $70,000 is allocated for drainage work each year. A majority of that money becomes a component of other streets projects.

The city manager presented the council with a proposed summary of the funding that would be required to meet the needs of CIP in future years under the more aggressive plan.

From the current amount of $1 million per year in funding for the streets program, Maxwell told council members members a goal of $2.5 million should be set for the streets portion of CIP; increasing the amount spent on drainage projects from $70,000 to $500,000 a year; a $15,000 increase for sewer, from $485,000 to $500,000; and for replacement of water lines, increasing the amount from $255,000 to $500,000 per year.

Overall, the proposal would increase CIP funding from $1.81 million to $4 million per year.

"If we were to issue a $4 million street bond, our general fund indebtedness would change, as would the total indebtedness for the city," he said. "Then, if we add in a $2.5 million sewer bond, our total indebtedness would increase to the same level it was in 2003 and start working its way back down."

The council recommendation would call for a $6 million bond package that would involve a 10-year general fund obligation of $3.5 million and a $2.5 issue obligating the water and sewer fund for a similar period of time.

To offset the projected bonded indebtedness, Maxwell pointed out the continuing trend of increases in sales tax revenues of about 9 percent, an 8 percent increase in property tax valuations, along with an increase in earnings and an increase in fines and court costs from municipal court.

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