Richmond City Council began deliberating a proposed budget on Monday that includes a 3.8 percent utility rate increase on top of a property tax increase and a new cigarette tax.
Utility rates include water, wastewater, stormwater and natural gas. The rate hike translates to a $5.82 per month increase for the typical residential customer, according to the Department of Public Utilities. That’s higher than the proposed rate increases in Hanover and Chesterfield Counties, but less than Henrico and Goochland.
Calvin Farr, the Director of Richmond’s Department of Public Utilities, told City Council that “modest increases” in utility rates are “recommended to continue” beyond just next year.
“We want to eliminate the possibility of rate shock, but there is a great number of needs that need to be implemented over a period of time,” he said.
The Department of Public Works currently has $583 million in capital improvement needs, Farr said. Much of the need is in maintaining and revamping aging stormwater and wastewater infrastructure.
“There are pipes in the ground over 100 years old, so many older pipes that we can’t replace them in one year,” Farr said.
Richmonders face similar utility rate increases as people living elsewhere in the U.S. The average annual price escalation is 3.3 percent for wastewater and 4.1 percent for water, according to a study by the U.S. Department of Energy. Despite that, some City Council members are concerned about how low-income residents will be able to manage the increased cost.
Second District Council member Kim Gray, who represents areas like Scott’s Addition where residents have already seen big hikes in property tax assessments, says the utility rate increase is like adding insult to injury.
“We always say it’s just a cup of Starbucks, but some of our people can’t even afford Starbucks,” she said.
City Council will have until the end of May to make a final decision on utility rates.