Warrenton city officials are considering raising water and sewer rates 5 percent to offset operating costs that are expected to increase due to stricter requirements from the Environmental Protection Agency and Missouri Department of Natural Resources. According to figures provided by the city Tuesday night, the average monthly water and sewer bill for residential customers would increase $1.78, while commercial customer bills would go up $5.91. Residential and commercial customers outside the city limits would 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). All six aldermen indicated during a budget work session Tuesday night they were in favor of a 5 percent rate increase after also considering 2 or 3 percent hikes, or no increase. Tuesday's meeting was the first of several to be held over the next couple of months as officials prepare to have the 2010-2011 budget finalized for approval in June. The fiscal year begins July 1, also the same time when the new water and sewer rates would go into effect. "It's inevitable we have to raise the rates," Ward 1 Alderman Phil Tallo said. "We can try to keep it as minimal as we can." City officials acknowledged the hardship for citizens during a difficult economic climate, but emphasized water and sewer rate increases could not be ignored. Concerns were raised that a bigger hike would only follow in the future if the rates were kept the same. Prior to the final decision, Mayor Greg Costello asked Terri Thorn, director of operations/finance officer, to compile a list of rates from surrounding cities for the board to review. Last year, water and sewer rates went up 2 percent. "I think we have to look at something that is reasonable, that is manageable," Costello said. Under the proposed 5 percent hike, the city expects to have $526,769 available for capital improvement projects in 2010-2011. If the rates were kept the same or increased 2 percent, that figure decreases to $416,345 and $460,515, respectively. Some of the available funds could be used to implement the EPA's Capacity, Management, Operation and Maintenance (CMOM) program. City officials said the program is being mandated by EPA and DNR following an 18-inch sewer main break last October caused by high water approximately one-mile from the city's wastewater treatment plant on Willow Road. Public Works Director Rob Hamlin said the CMOM program is designed for the city to maintain the sewer system and identify areas where old lines should be replaced. While the problem areas don't have to be fixed immediately, the city does have to document a short-term plan for improvements, according to Hamlin. In addition to fixing sewer lines, Thorn said DNR told the city to expect hiring at least two employees to manage the new sewer requirements. If the employees were each being paid $40,000, which includes benefits, the city would have an additional $80,000 in payroll expenses. City attorney Chris Graville, who described the program as a "huge expense to the city," said a meeting between DNR and the city has been requested to go over program specifics. "This is going to be a very significant change," he said. "Obviously it's for the better, but I don't want to underemphasize this. It will change our wastewater and sewer department tremendously." Aldermen hope the rate increases can balance the future sewer expenses related to the CMOM program and other needed areas. "As much as I would hate to see rate increases, it looks like we're stuck between a rock and a hard spot," Ward 3 Alderman John Clark said. "We don't have much choice." Ward 2 Alderman Fred Flake added: "With the situation we're in and the information we received tonight - we've never asked for 5 percent before - but I think we're at the point we have to (raise rates)." Also during the budget meeting, Thorn made a recommendation to aldermen to not give employees raises during the 2010-2011 fiscal year. A 1 percent wage increase would cost the city approximately $23,200, while a 2 percent bump brought the figure up to $46,400. Thorn said payroll expenses can be reviewed if extra funding becomes available later in the budget process. City employees received a 2 percent increase a year ago.