Auditing Firm Offers Up Recommendations About Utility Rates And Taxes

For years auditors hired to review Caledonia finances have recommended village officials look at eliminating the mill tax for the Caledonia Utility District and just charge user fees for water and sewer customers.

Finance Committee members, who heard the recommendations during a meeting held Monday, weren’t fans of the auditor’s recommendation as it pertained to water and sewer service.

But the drainage commission is already looking at the possibility of charging tax-exempt customers for storm sewer fees, which was also a recommendation auditors made.

Renee Messing, of Clifton Larson Allen, recommended that the Village consider charging residents charging a water and sewer user fee rather than having the item on the tax rolls have a levy.

“At some point in time, you are going to want to look at a utility rate increase and to change your water rate you’d have to do it with the approval of the PSC and so you really can’t take that tax levy away from the water utility until you go to the PSC,” she said.

But Tom Weatherston, a member of the Finance Committee, said he wasn’t a fan of getting rid of the mill tax for water and sewer services.

“We put it in the tax levy so everyone in the district pays their fair share,” he said. “You can’t move that fee into the water usage rate because not everyone in the district buys water, and then that fee is then spread over the district.”

Some village residents living in the utility district in the Caledonia are charged a mill tax levy for sewer and water, but don’t pay a user fee.

Here’s why: some residents living along Dunkelow Road in Franksvillehave access to water hookups, but they aren’t connected to the water service. When the hookups were put in, the Town Board said connection wasn’t mandatory. The Village charges a mill tax for the infrastructure costs, and a separate water and sewer user fee. So, if the Village eliminated the mill tax, the sewer and water usage rates would increase 50 percent.

Bob Lui, head of the Caledonia Utility District, said the current system works well because people living in the utility district are all paying for the infrastructure regardless of whether they are hooked up to the service or not, but they aren’t charged a fee if they don’t use the water.

“I’m against getting rid of the mill tax,” Lui said. “Why should people pay 50 percent more to support the pipe people have access to for free?”

Storm sewer fees are another story.

Messing said the Village should take a look at changing the current rate structure for storm sewer services.

“We recommend that the Village review the rate structures and funding mechanisms to assess the appropriateness of continuing the tax levy support,” according to the communication letter from Clifon Larson Allen.

Weatherston also said the Village really wants to be equitible in how they charge for storm sewer. The Village drainage commission has been talking about switching to a system based on how much water runoff properties have in the drainage districts.

“That’s why I’m pushing for the storm water to do it so then we can use that same (ERU) equivalent residential unit system,” he said.

One of the benefits in using the ERU system is that the whole village would pay for the service and the charge would be nominal because it’s spread over a bigger base. But that base may also include tax-exempt properties.

“Right now we’re just talking about it and we have been for a long time,” he said. “The trouble is how to do it fairly.