Cape Girardeau Water Rate Plan aims to balance funding needs with affordability

CAPE GIRARDEAU, Mo., (KBSI) – If voters approve a charter amendment on Aug. 5, the City of Cape Girardeau plans to keep water rate increases as low as possible while funding necessary improvements to the water system.

By law, revenue from water bills may only be used for the water system and cannot be allocated to other city programs or projects.

Under the city’s proposal, water rates would increase by 10% in the first year following the amendment’s passage, followed by 15% increases in each of the next two years. In the fourth year, rates would rise by 5%. Future adjustments would be evaluated annually during the city’s budget process.

This plan would apply to 99% of residential water customers.

City officials said local control of the water system and billing policies would be retained under this model. However, that control could be lost if a private company were to acquire the system.

In 2024, three companies expressed interest in purchasing Cape Girardeau’s water utility. Each company said rate increases would still be necessary, with customers bearing the cost of improvements in addition to providing profits for the company. Private utilities are not required to hold a public vote before increasing rates.

“Every company we met with said rates need to increase,” Mayor Stacy Kinder said.

City water rates are currently among the lowest in the region and fall below the threshold needed to qualify for certain state and federal grants. According to the national Affordability Index (AI) standard, water is considered affordable if the average household spends 1% of its income on 5,000 gallons per month. Cape Girardeau’s AI is 0.76, making the city ineligible for some external funding opportunities.

Currently, the city charter limits utility rate increases to a maximum of 5% annually. The proposed charter amendment would allow the city to raise rates by up to 15% per year, if necessary, to fund critical water infrastructure improvements. City officials emphasized that increases would be implemented gradually and remain lower than a previously proposed one-time rate hike considered in 2024.

For most residents, a 15% increase would translate to an additional $4.71 per month on their water bills.

If the proposal fails again, city officials warn that the water system will continue to deteriorate, potentially requiring water conservation measures or privatization in the future.