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June 25, 2014

Duncan council adds $5 to monthly water bills

DUNCAN — The price of water on Tuesday was increased by  $5 a month in Duncan  for at least the next 18 months.

  The $5  surcharge will be applied to each of the city’s 11,646 water meters beginning in July.

   City Council approved the increase to make up for funds taken out of the city’s operating budget to pay for Duncan’s share of Waurika Lake, the sprawling reservoir in Jefferson County that is the city’s primary water source.

   “We have to be prudent,” City Manager Jim Frieda said. “We can’t continue to lose money.”

  The city has spent about $700,000 from its operating budget to service its annual Waurika Lake debt, Frieda said.

   Duncan should be able to recoup that amount in about 13 months with the $5 monthly surcharge, he said.

   After 18 months, the City Council can eliminate the surcharge.

   Waurika Lake was built in 1977 by the U.S. Army Corps of Engineers. In 2010, Duncan and the five other cities that belonged to the Waurika Lake Conservancy District were approached to buy their remaining rights to water storage in the lake.

    Duncan’s share in that cost came about $9 million.

    The last water rate hike approved in 2011 was designed to pay off that note, but the revenue fell short of projections, forcing the city to use operating funds that are intended to pay employees and the city’s other maintenance and operations costs.

   Frieda, in explaning the city’s dilemma, made note that cities in Oklahoma are not funded by property taxes but by sales taxes.

   Oklahoma is the the only state in the country in which cities do not share in property tax revenue.

    The city receives 3.5 cents of the 8.7 percent sales tax that is collected in Duncan.

   Two cents of the city’s share of sales tax revenue goes to Duncan’s  operations budget, but  it doesn’t generate enough money to pay for the entire city payroll, Frieda said.

    Another penny of the city’s share of the sales tax is restricted to Duncan’s capital improvements project budget while the other half-cent is dedicated to economic development.

    Duncan over the years has helped meet its payroll costs with money generated from the city-owned Duncan Power electric utility and its sale of city-generated water.

    The ongoing drought and water rationing measures that have been in effect since March 2013 have resulted in cuts in city water sales, which have affected the city’s operating budget.

    In other matters the council:

    

     Voted to apply for a grant to design a plan to replace the runway lights at the airport. The city’s cost for the project is $4,600.

     Approved a resolution to support Cornerstone Associates LLC to apply for tax credits to build a 48-unit affordable housing project for seniors.

     Approved a $25,000 contract for an engineering study of the city’s water treatment plant and distribution system to determine how to meet  water quality regulations.

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