As a room full of agitated, disappointed members of the public looked on Monday night, city leaders and hired consultants made the case that doubling water rates was the only feasible way to plug a multi-million dollar budget deficit. 

City Council added the presentation to their agenda Monday night after tabling a vote to double water rates at its last meeting Feb. 25, citing the need for further public communication. No action was taken on Monday, but the Council is scheduled to vote on the rate hikes tonight (March 11).

How Did We Get Here? 

City utilities staff and a representative with Raftelis Financial Consultants, Inc. — the consulting firm hired to do the water rate study — gave a 90-minute presentation about the situation. 

Current rates are not covering operating costs due to excessive water loss, which has been steadily increasing over the last decade. Council member Bill Burckart said water loss has grown from 27% in 2014 to 54% in 2024. 

The issue was identified in the City’s last water rate study in 2021, although at the time, faulty meters were thought to be the cause.

The assumption was that as the meters were replaced, the loss would resolve. Although replacing the meters helped, the City discovered that meters were only part of the problem, and the loss continued to grow.

“We started to identify that the leaks were at a larger number than we could keep up with,” said Preston Newbill, water utility’s deputy director. 

Now the focus is on finding leaks within water service lines and replacing those pipes.

In June 2023, the City started a water service line replacement program, Newbill said. The City started to get more aggressive in its approach in 2024, as water loss continued to increase.

Many of the faulty lines stem from developments built between 2005 and 2010. Mayor Stephanie Orman said PVC pipes typically last at least 25 years and can remain functional for up to 50 years.

“They should last a lot longer than they are,” Newbill said. “There was an extreme growth period then. The city did not have the staff to witness the inspections that we should have, and so that’s why we have learned from our past decisions.”

Council member Burckart said the City has known that the water loss was growing for years. He said there’s been $21 million in lost water since 2020.

“How we cash flowed all these departments and broke even when we had these kinds of losses, I don’t know,” he said.

Limited Funding Options

Burckart said at this point he doesn’t see another option other than the rate increases in order to maintain the efforts to fix the water leaks. 

“I wish I did. I’ve tried for years, for decades to put money towards this situation, and we have not,” he said.

Collin Drat with Rafetlis said another option that was discussed was a loan from the general fund, but that utilities are supposed to be self-sustaining based on rates and fees. 

“We need to be careful how much of that we do, because it is an enterprise fund of the city, and it does need to be basically self-sustaining over time. So there are limits on what we can do there,” he said.

Drat also said impact fees have been brought up and they are an option for funding growth-related capital, but that they cannot be used to cover the current shortfall, which is driven by operating costs.

Council member Cindy Acree said she wants to reevaluate the city’s 2025 budget and look for ways to find funding, including the possibility of not adding city positions that were previously approved. 

“I’m not trying to put blame anywhere, but the blame really goes to the City Council, it’s on us,” she said. “We’ve been looking at these budgets and trying to find ways to avoid putting the impact on the consumer but that’s exactly what we are doing right now, and I don’t think that the taxpayer or the customer should bear all the burden of this.”

She said the city has a lot of great amenities and has seen a lot of staff increases, and while she’s not advocating to cut essential staff, “I think we are going to have to really look harder.”

“Find other places in the budget we are going to have to cut and it may be painful and it may hurt,” she said.

Council member Gayatri Agnew said the city’s finance committee has been going through line by line to look at what they funded in the 2025 budget.

“I wish there was $10 million in the budget that we could redirect or cut, but to be honest, what that would require of the city is closing our library or eliminating our parks department, and these are not things that are tenable,” she said. “We looked for it.”

She said the vote on rate increases is a “short-term vote to cover a short-term cash flow challenge.” 

“The reality of the constraints, not just in our water, but in our water, our wastewater and our electricity, are astronomical, and it's not okay to sit here and talk about $10 million but not talk about the close to a billion dollars that our city needs to cover those gaps long term,” she said.

Public Comment

Several of the people who made public comments mentioned that many of their questions were answered within the meeting. But many still voiced concerns about Council placing the full burden on utility customers. 

Bentonville resident Carolyn Cornine said the public should not have to pay a 100% rate increase for a mistake “that you guys created.”

“If you were a private amenity, people would lose their jobs or the company would be bankrupt. If the city can’t do any better than this, then it’s time for the city to get out of the utility business,” she said.

David Flowers said he is retired on a fixed income, like others, and while he has planned for cost increases to a certain extent, he did not plan on this.

“The incompetence I’ve heard on how this has been handled amazes me,” he said. 

Mike Liddekee said what he’s heard tonight is extremely concerning and it seems this issue has not received the amount of public scrutiny it has since post-election. 

“It’s very concerning to me that this information did not come out prior to the election given that we had two people plus the mayor that were up for election back in November,” he said. “We have a Council that has been very derelict in their duty for a long time and I wish we had November back so we could look to make some alternative changes.”

City Also Examining Other Utility Rates

The proposed change will result in a 12% increase in the overall average residential utility bill, which also includes sewer, electric and trash, according to the City.

However, the City is also underway on a rate study for both sewer and electric rates. Sewer rates are expected to go up by “a single digit” increase around January 2026. For electric, customers can expect 4–8%, depending on rate class, meaning individuals might not see that high of an increase.

The City plans to evaluate water rates annually for at least the next five years while it monitors the water loss. Drat said the rates will be set strictly to recover the cost to provide service, and will be adjusted up or down to ensure revenue aligns with costs.