Calling it one of the most challenging budgets in recent years, Warrenton aldermen adopted the 2010-2011 budget last week.

The budget includes a 5 percent increase in water and sewer rates and projects a 6-percent decline in sales tax revenue.

Warrenton aldermen approved the new fiscal year budget, which goes into effect July 1, at last Tuesday’s meeting. City officials anticipate spending $8.4 million, while having revenues totaling $8.2 million.

A year ago, the city budgeted $9.5 million in expenditures and $8.3 million in revenues. 

The total projected revenue from all funds is $7,441,137, of which $2,323,209 is from the water and sewer fund and $2,398,800 is from sales tax.

Real estate and personal property tax revenues are projected at $469,700, slightly higher than last year’s budgeted amount of $462,984. The city anticipates receiving $668,723 in funding from federal and state grants and $125,000 from the tourism tax.

The total operating expense, excluding capital expenditures and debt service, is projected at just over $6 million 

“This budget was probably the greatest challenge that Gabrielle (Currie, finance manager) and I have seen since we’ve been with the city,” Director of Operations/Finance Officer Terri Thorn said, “in trying to make sure that all services were covered and the ability to meet those needs to continue to provide services without cutting services to our residents but then also to include funding for capital projects that are much needed.”

According to city officials, the average monthly water and sewer bill for residential customers inside city limits will increase $1.78, while commercial customers will see their payments go up $5.91. 

Residential and commercial customers outside the city limits will see their bills increase $3.54 and $17.52, respectively.

The current average monthly bills are $35.66 (city residential), $118.14 (city commercial), $70.74 (outside residential) and $350.49 (outside commercial).

Aldermen reached the decision on the rate hike in March after considering 2 and 3 percent increases. Last year, rates went up 2 percent.

Officials said previously the rate hike was the result of having to implement the Environmental Protection Agency’s Capacity, Management, Operation and Maintenance program, which will require the city to hire at least two employees to manage the new sewer requirements.

The city estimates spending $951,350 in the next fiscal year on capital improvements, a significant decrease from the prior year’s budget where $2.1 million was appropriated.

The new budget includes $201,950 for projects that had been allocated in the prior year’s budget, but weren’t completed. 

Building and upgrading deteriorated sidewalks will be the main focus for city crews   next year. The city has allocated $20,000 for sidewalk improvements throughout the city, with an additional $16,000 in the street department to be used for a stretch on the north side of Veterans Memorial Parkway between Walgreens and Denny’s. 

In the water/sewer department, $150,000 has been appropriated for improvement to the Water Street lift station. Funds also have been set aside for improvements to the athletic complex and Dyer Park.

The budget also includes no wage increases for employees, though Thorn noted that a “handful” of employees will receive merit raises, primarily for moving into supervisory roles.

Beginning his 19th year of public service, Mayor Greg Costello said this was the first budget he could recall the city not being able to afford raises.

“I think it tells us the state of the economy,” he said. “Obviously, as much as we would like to give pay increases, we certainly have a great staff of employees, department heads, we can only do what we can afford.”

Last year, employees received a 2 percent raise, while a 3 percent bump was given in the 2008-2009 fiscal year.

The city is also facing a 10 percent increase in utility expenses, 9.9 percent jump in health insurance premiums and 5 percent bump in liability and property insurance.

City officials also chose to allocate $15,000 toward an initiative to open a satellite college campus in Warrenton. The funds will be used with others appropriated from the county and Warren County R-III School District to defray start-up costs such as rent and utility expenses.

Also included in the budget is contract renewals for local service agencies Agape Ministries of Warren County ($14,000), Turning Point ($12,000) and the Warren County Senior Center ($8,000).