LINCOLN — Managers at Kellogg's, Skinner Baking and other large Omaha food processors asked the Legislature on Thursday to help resolve their dispute with the city over fast-rising sewer rates.
The companies — the largest water users in the city — maintain they are carrying an unfair portion of the sewer rate increases needed to finance the federally mandated $1.7 billion restructuring of the Omaha area's sewer system.
They say the rate hikes are forcing them to consider layoffs or move away.
They expressed frustration with city officials and joined a state senator in asking for a commission to study more equitable sewer fees.
“We need to re-evaluate the whole fee structure. We need an independent perspective,” said Sen. Heath Mello, whose South Omaha district includes many of the meatpackers and food processors hit hard by sewer fee increases.
City of Omaha officials also testified in support of the idea, but they disputed claims that the city has been unresponsive to concerns about rate increases.
Marty Grate, the city's environmental services manager, said the city's sewer-rate consultant is supposed to complete a study this week of four alternatives advanced by the large water users and Mayor Jim Suttle.
Grate said restructuring the rates is complicated and that any change would likely shift costs onto other businesses or residential customers, who are already paying higher rates.
He said industrial customers will still get a bargain on sewer fees in Omaha, even with an average 84 percent increase over the next five years.
“We are not pricing ourselves out of the market,” Grate said. “Our (industrial) rates would have to triple to approach the rates we're seeing in other areas of the country. The concern is we're losing a huge advantage that Omaha enjoyed.”
The committee took testimony on Legislative Bill 683, which would create an 11-member Metro Storm Water Management Commission consisting of state senators and Omaha business and civic leaders to study new sewer fee structures and options for obtaining state or federal funding.
“I think the risk of losing businesses is bigger than the City of Omaha thinks it is,” said Sen. Chris Langemeier of Schuyler, the committee chairman, in an interview.
State lawmakers have already advanced another proposal by Mello this year that would “turn back” to the city up to $2.6 million in annual state sales taxes that Omaha-area sewer users will pay on the higher sewer fees.
But Mello said that money, if the full Legislature approves it, is small change compared to the $1.7 billion price tag.
The state needs to step in and study a broader solution to what he called “a pending economic crisis” that could force good-paying manufacturing jobs to leave Omaha.
“The current planned fee structure on industrial water users is potentially devastating to our state and local economies,” Mello said.
A representative of Skinner Baking, which has a 100-year history in Omaha, said the firm is “50-50” on whether to double its 400-employee workforce in the city, or move to Wisconsin or New York State.
“We really want to stay in Omaha, but this (sewer fee increase) was the straw that broke the camel's back,” said Audie Keaton, president of Skinner Baking.
A month ago, the Omaha Association for a More Competitive Business Environment, a coalition of the top 10 water users in the city, met with Suttle and presented an alternative.
It would shift some of the costs from the city's 29 industrial users to the nearly 13,000 commercial sewer customers. Commercial customers would get an average $37-a-month increase and industrial customers an average $16,000 monthly reduction; residential rates would not change.
Keaton complained that the group had yet to get a response.
“We are asking for leadership,” he said.
Peter Moait, manager of Kellogg's 600- employee plant in Omaha, said the prospect of huge sewer rate increases prompted his company to pare back its plans to invest $50 million in the local operation to $30 million.
The sewer rate hikes will increase costs by $3 million over the next five years and make the plant less competitive, Moait added.
Contact the writer:
402-473-9584, paul.hammel@owh.com
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