Collectively, customers of Vicksburg’s water and sewer services will pay $1.2 million more in the next year in minimum charges and much more in tiered charges.

Rate increases to begin in May were approved by the Mayor and Aldermen Tuesday.

In base fee adjustments, each of the city’s 8,500 residential customers will pay $93.60 more for water and sewer services over the coming year, and 1,300 commercial customers will pay $339 more.

The increases, said the board, will be used to pay off multimillion-dollar deficits in both utility funds over the next seven years. Because those deficits have been paid from the general fund, the increases will free up the money for the mayor and aldermen to allocate to other purposes.

City Accountant Doug Whittington said there is a $2.5 million deficit in the water fund and a $2.4 million shortfall in the sewer fund. According to his calculations, it would take seven years to achieve a balance where the city-owned utilities will be self-sustaining and deficit-free.

“Basically, we’re creating a surcharge … and that surcharge will work to retire that debt,” said Mayor Paul Winfield. “The city has been supplementing these funds, and we cannot continue to do that or we will bankrupt the city.”

Specifically, minimum water rates for residents will rise from $5 to $8.75 per month, based on consumption of less than 2,000 gallons. The charge for each 1,000 gallons after the first 2,000 will rise 30 cents to $3.07.

Minimum sewer rates will go to $12.90 per month, up from $8.85, also based on the 2,000 gallon threshold. Additional volume charges are going up by $1, to $3.60 per every 1,000 additional gallons.

Commercial customers will see larger increases. Their minimum usage fee is going up by $12 a month to $35.81 and minimum sewer rates will more than double — to $28.25, from $12.

“The reason for the discrepancy is the commercial use puts more demand on the system,” Whittington said.

In the past, shortfalls in the water and sewer funds have been subsidized by a number of other city funds, primarily the general fund, which is approximately $31.5 million for this fiscal year. In fiscal year 2008, Whittington said the water fund ran a $242,000 deficit and the sewer fund was $393,000 in the red. Last fiscal year was even worse, he said, with the water fund drawing $770,000 from other funds and the sewer fund running a $829,000 deficit.

On top of being a budgeting nightmare, Whittington said supplementing the utility funds with the general fund each year is not allowed by state municipal law.

“It becomes a question of how long can we continue to allow sales tax, gaming revenue and property tax to subsidize these funds that are supposed to be self-sufficient?” said Whittington. “The general fund is running short as well.”

South Ward Alderman Sid Beauman said the utility funds have been accumulating millions of dollars in debt mostly due to failures in the city’s aging sewer and water infrastructure. Many of the pipes are made of clay and date back to more than 100 years, making burst, collapsed or backed up pipes a common occurrence.

“That’s why this quote ‘surcharge’ is so important,” said Beauman. “It will generate an account in the future that will have dollars in it in the event of emergencies.”

Before the surcharges start to accumulate into an emergency repair fund, they’ll be used to pay off the nearly $5 million debt the water and sewer funds have racked up. Of the collective $7.80 rise in water and sewer charges for residential customers per month, $4.50 will be set aside to repay the utility bond debt. On businesses with water and sewer, $14.75 of the $28.25 monthly increase on their bill will go toward the debt.

Once the utility fund debts are repaid, Whittington said the administration will have the choice of continuing the surcharges to create an emergency repair fund such as Beauman envisions or eliminate the extra fees. Whittington emphasized the city’s rates are still less than half of those charged by several local water districts, and noted the last time water and sewer rates were increased was 2006.

“This is a hard thing to do,” Winfield said of the rate hikes, “but it’s something we have to do.”

Vicksburg also operates a natural gas utility and that’s where most of the rate fluctuations have been in recent years, as well. After five increases approved throughout early 2008 more than quadrupled the rate, a decrease in September 2008 dropped base fees to $4.31 per 1,000 cubic feet — still roughly $2.50 higher per month than before the increases began.

In August 2008, the city also raised garbage collection fees. Single-family residences and small commercial customers who have garbage collected twice weekly saw their monthly fees rise by $2.06, from $17.89 to $19.95. Downtown businesses were subjected to an even sharper rise in rates, from $43.53 to $48.54, for collection four times weekly.

Waste Management of Mississippi Inc. is contracted to collect garbage, but the city handles the billing and administration of the service. The electricity franchise in the city is owned by Entergy Inc.