The rate that Oak Harbor residents pay for city-provided utilities will increase by 5.4% a year for the next five years under a new rate analysis.

If adopted by the city council, the total amount a resident pays for water, sewer, solid waste and storm drain would increase from the current amount of about $199 a month to about $252 by 2030.

At a workshop meeting Wednesday, council members grilled Deputy City Administrator and Finance Director David Goldman about possible ways to lower rate increases, but he didn’t see anyway around it. The rates will have to increase in order to keep utility funds solvent, he said. Many of the factors causing rate increases are beyond the city’s control.

Goldman explained that the city of Anacortes, which supplies Oak Harbor with water, is increasing wholesale water rates by 22.5% this year. Island County is planning a 22% increase in tipping fees for residential and commercial solid waste.

In addition, Goldman pointed to inflation and the need to update the city’s aging infrastructure.

An ordinance that became effective this year lowered sewer rates by 19%, but the change is eating up the city’s utility fund balance, which is not sustainable, Goldman said. The utility budgeted fund balances are projected to start going into the negative by the end of 2026.

If no action is taken to adjust utility rates, Goldman said, the city’s water and sewer spending budgeted fund balance will cross the negative threshold in 2027, with solid waste and storm drains hitting the negative even sooner, in 2026.

Councilmember Bryan Stucky questioned Goldman about options.

“Obviously, raising the rates is the logical answer, but there’s no other magic that you know of to not increase rates?” he asked. “I know the answer is no, but I have to ask the question.”

The city staff works to obtain grants and inter-governmental funds, but there is not a substantial amount of money out there to help cover operational costs, Goldman responded.

“We may be able to come back maybe in two or three years, depending on the result of that and say hey, remember we said we are going to raise (rates) by 5%, well we only need to go up by 3.5% or 4%,” Goldman said.

Stucky asked whether simply encouraging water conservation would help, but he was told that reduced usage wouldn’t lower the fixed costs associated with piping and treatment infrastructure. Over the past 10 to 15 years, overall water usage has remained steady, Public Works Director Steve Schuller explained.

Mayor Pro Tempore Tara Hizon wondered if the city is profiting from increased utility rates.

“As far as legally goes, we cannot use water or wastewater or any of the utility fund money for anything other than the purpose of those funds,” Goldman said.

The money is limited to funding only the operations, maintenance and service support of that utility, Goldman expanded.

While the factors that increase water rates and tipping fees are mostly out of the city’s control, there is a way to avoid raising rates by instead cutting funding for future major infrastructure upgrades and replacements, Councilmember Jim Woessner noted.

“Which, quite frankly, I think, would be ludicrous. I mean, it’s what caught us to where we were a few years ago when being faced with building out some major infrastructure and having no money to do it,” Woessner said.

Mayor Ronnie Wright agreed with Woessner, calling it “crazy” to cut those funds and emphasized the importance of planning for the future to leave the institution better than they found it.

Staff will bring the proposed utility rate to a regular council meeting for consideration later this year.