The Norman Transcript

May 5, 2013

Utility rate charter provision reviewed

By Jessica Bruha
The Norman Transcript

NORMAN — A Norman charter provision that prohibits utility rate increases without a popular vote could hamper attempts to partner with other cities to bring water out of southeast Oklahoma, Charter Review Committee members said this week.

“It is crucial to our fiscal stability to fix this problem,” said committee member Carol Dillingham. “Norman cannot play in a regional economy, which is where we are headed, where we have to be headed, unless we get rid of this charter provision.”

The charter provision requires a vote of the people for any utility increases. Some say it would be impossible for Norman to build the needed partnerships if the governing body of Norman does not have the ability to adjust its rates accordingly, said Harold Heiple, Chairman of the Charter Review Committee.

For the charter provision to be changed, the committee said regulations would have to be set up so rates would be increased by a reasonable percentage, and voters wouldn’t have to fear an extreme increase in their utilities.

Most communities steadily increase their rates and it happens slowly over time, committee member Jane Abraham said.

Oklahoma City currently has a 2 percent increase a year per every five years, she said. Abraham is also the Community and Government Affairs manager for the city of Oklahoma City.

Heiple and committee member Richard Stawicki said Norman’s charter provision is currently the only one of its kind in Oklahoma.

Heiple said in 1974, there was a drug bust in Norman and when Dallas newspapers broke the story, they dubbed Norman the “drug capital of the southwest,” which didn’t sit well with the mayor. In response, the mayor decided to hire more police officers.

At that time, revenue from utilities made up most of the city budget. To pay for police officers’ salaries, the council doubled utility rates, Heiple said.

This caused the Norman residents to rebel because they believed the council was acting in bad faith, leading to the charter change, Stawicki said.

Since voters have a fear of the governing body increasing the rates, the charter provision has not been eliminated yet, committee members said.

Many committee members agreed they would like to look at utility rate structures and how this has been historically practiced over the last 15 to 20 years by other communities to understand how changes could be implemented while protecting Norman residents from high rate increases.

A 3 percent increase was discussed, but city council member Robert Castleberry said he did not believe that would be enough.

“Typically, one of the biggest costs in the sanitation and water departments is salaries,” Castleberry said. “That (3 percent rate) is not going to cover any of your infrastructures, that is not going to cover any of your big water supply. That’s just keeping your employees paid. That doesn’t even cover your health insurance. I’m not sure that that is an adequate number.”

Castleberry also urged committee members to remember the 1970s, when 18 and 19 percent was a typical interest rate.

“We are so used to such a low-interest-rate environment that 3 percent seems awfully high. That’s not that high, historically. More people can tell you that interest rates 10 years from now will be close to 10 percent,” he said.

Dillingham said she believed, during previous talks about the increased percentage rate, that the numbers would be closer to 5 percent.

Jessica Bruha