"Marshall County's Board of Public Utilities built a [water pipe] line around the town and now buys water from Lewisburg," Town Administrator Mike Hatten said yesterday.
"It was a business decision and I understand that," Hatten said of the town's loss of water sales revenue from the county utility. "Chapel Hill lost about $70,000 a year when the county started buying water from Lewisburg."
The town's proposed rate hike is an increase of 6.66 percent from separate base rates on water and sewer service from $15 per month to $16 per month.
Residents who receive water service only will pay $12 more per year, he said. Those who have water and sewer service will pay $24 more per year.
Chapel Hill's utility rates are "in the middle" of a list of 248 similar utilities in Tennessee, Hatten said.
There are other fees associated with water and sewer service, but those don't affect current customers, the town manager said.
There is another change that affects the utility's budget, he said. It's where tap fees are deposited in utility accounts to pay for new pipe and related equipment.
To accommodate the changes, "We did cut a position," Hatten said. Beyond eliminating a city job, town officials have made other spending cuts so revenue from the rate hikes will cover the loss of water sales.
State law requires town utilities to have their budgets separate from the municipalities, and this year the town's budget won't require a property tax rate hike.
"I think our ability to generate revenue will be improved by new buildings that are going into service," Mayor Carl Cooper said. "I don't know how fast this will materialize…"
Asked how the tax rate might be affected by reappraisal and a certified rate from the state, Hatten replied that the town has not yet addressed that issue.
After a budget workshop among aldermen Wednesday night, Cooper said, "We'll be fine."
Conversation during the budget review indicated aldermen advocate repair of town vehicles instead of buying new cars, and some of the remarks were lighthearted.
After the mayor commented that a city van "distresses me" when he rides with Hatten, Alderman Horace Hill said, "Maybe we should buy a Volkswagen."
Chapel Hill's budget could be adopted on a second and final reading during the town board's May 14 meeting. It's set to begin at 6 p.m., unless there's a public hearing. If so, the hearing will start at 5:30 p.m.
The proposed budget shows $1,857,890 in anticipated revenue and proposed spending at $1,492,983, according to a review of the proposed budget before Wednesday evening's workshop.
Chapel Hill's current budget has $1,824,650 in revenue and spending proposed at $1,477,138.
Property tax revenue was anticipated at $300,000 last summer when the current budget was adopted. It's up to $330,000 for the fiscal year starting July 1.
Sales tax revenue last year was estimated at about $100,000 and this spring it's estimated to grow to $115,000.