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The city plans to increase its water and sewer rates, which will raise about $30,000 for the city next year. The money will be used to upgrade the water and sewer lines as part of the Lake Avenue improvements next summer. The city is responsible for sewer and water upgrades while the state will pay for the road improvements.

The rate increase comes despite the city having more than $400,000 in two water accounts and almost $900,000 in three sewer accounts as of the end of October.

At the city budget hearing last week, public works director Ron Mergen outlined the proposed rate increases. The water rates would go from $1.43 to $1.48 per gallon for homeowners utilizing over 2,000 gallons per quarter. Rates for homeowners that do not use 2,000 gallons will not be increased.

The bill for an average homeowner (someone using 17,000 gallons of water per quarter) will increase 25 cents per month for water and 25 cents per month for sewer. Since the city bills quarterly (every three months), this adds up to a $1.50 increase on each bill or $6 per year.

A business using 500,000 gallons of water per quarter would see an increase of $16.60 per month or $49.80 per quarter. Their sewer rates would increase $25 per quarter or $100 per year.

Overall, the city increased its budget for next year by 8.9 percent while lowering its tax levy by 4.9 percent. The city was able to do this because its state aid was increased by $93,000.

City spending increases in 2002 include: $33,900 to cover the increases in medical insurance for employees; $33,000 for sealcoating and street improvements; $30,000 to purchase a new copier for city hall; $18,000 for the Koronis Trail and to start a pool fund; $9,000 to update the city's comprehensive plan; and $8,000 to hire lifeguards.

The council is expected to approve the water and sewer rate increase, its 2002 budget, and its 2002 tax levy at its meeting on Wednesday, Dec. 26.