A storm-water tax proposed by Lexington Mayor Jim Newberry should automatically increase each year, according to a divided task force of Urban County Council members.
A majority of the city's Storm Water Fee Task Force will urge the council to hitch the proposed tax to the Consumer Price Index in coming weeks.
Backers of the change say that implementing automatic increases would ensure that the city can keep up with labor and material costs without fighting political battles.
"When we rely on political will to put enough money into projects, it doesn't necessarily occur," said Urban County Councilwoman Linda Gorton, chairwoman of the task force.
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Another change being proposed by the task force is an audit and review of the fee every five years. The group is also considering a proposal to phase in the fee — $4.16 a month per 2,500 square feet of impervious surface — over two years.
In the meantime, Mayor Jim Newberry has started putting pressure on the task force to complete its work. The group has been meeting weekly since January to analyze the fee proposed for nearly every parcel of land in Fayette County.
The tax is expected to generate $16 million annually for improvements to Lexington's water quality through monitoring, fixing and maintaining the storm-sewer system.
The proposed fee is a requirement of a lawsuit settlement reached between the city and the U.S. Environmental Protection Agency, which accused the city of violating the Clean Water Act.
The timing of the fee's implementation is a critical financial issue, Newberry wrote in a letter to the council. "Until the fee is implemented, all funding for the storm sewer activities set forth in the consent decree must come from the general fund."
An estimate or a decision on the fee must come soon because it is needed to develop the budget for the fiscal year that begins July 1, Newberry wrote.
"The sooner the fee is implemented and starts producing revenue in FY10, the sooner we will be able to free general fund revenue for the multiple needs in parks, public safety, social services and elsewhere."
The task force should complete its work by the end of March, Gorton said.
So far, the task force has affirmed many aspects of Newberry's proposal, including the base rate of $4.16 a month per 2,500 square feet of impervious surface — rooftops, driveways, sidewalks.
The fee is based on a unit of measurement the city is calling an equivalent residential unit. The average residential lot has 2,500 square feet of impervious surface.
Every single-family home and duplex, regardless of size, would be billed $4.16 a month.
The amount commercial property owners would pay is based on the number of equivalent residential units of impervious surface on the parcel.
The task force's decision to tie future fee increases to the Consumer Price Index was hotly contested, narrowly winning approval in a 3-2 vote.
It's too early to discuss future increases of the storm-water fee, said Councilman Kevin Stinnett, one of the two members who opposed the idea.
The city is still developing the storm-water program, Stinnett said. "We'd be better suited to see how the program unfolds over the first couple of years and see how much revenue is taken in and see how much work on storm water is actually getting done before we talk about increases," he said.
However, Gorton notes that a lack of funding from politicians over time is a major reason the city had problems with the EPA.
By tying fee increases to an index, the city will always have the money necessary to meet its consent decree obligations, Gorton said.
The Consumer Price Index has increased an average of 2.8 percent a year over the past 10 years. If that trend continued over the next dec ade, the $4.16 fee would reach $5.33 by the 10th year.
Tying future fee increases to the Consumer Price Index isn't a new concept for the council.
When the council approved a sanitary sewer user fee increase last year, the council agreed to annual rate increases tied to the Consumer Price Index. Those annual rate increases will begin in July 2010.
Another change the task force has decided to make to Newberry's original proposal is to scuttle a credit program in which commercial property owners could reduce their storm-water tax by as much as 20 percent. In exchange, the property owners would complete projects that reduce the amount of water going into the storm sewers.
Instead, the task force has decided to set aside $1 million for an incentive program for businesses to reduce the amount of impervious surface on their properties.
Credit programs in other places have had low participation rates and are expensive to administer, Gorton said.
The committee is also considering phasing in the new fee, but no decision has been made yet.
The task force is discussing making the fee $3 a month for the first year, with an increase to $4.16 in the second, Gorton said.
Everyone has been hit by the bad economy and many businesses have not budgeted for the fee, Gorton said.
Since it will take the city a while to ramp up the storm-water program by hiring employees, establishing a maintenance program and beginning projects, the full $16 million isn't needed the first year, Stinnett said. "We'll never spend all $16 million in a year."