by Leslie Lytle, Messenger Staff Writer

“You’re probably going to be looking at another mandated rate increase to satisfy the state law,” Alderman Dean Lay warned residents at the May 26 Monteagle Council meeting commenting on the harsh reality of the town’s water-sewer budget for 2026-2027. “You can’t have two consecutive years of a loss without a mandated rate adjustment.” The Enterprise Fund budget for water and sewer showed a $40,000-$50,000 loss in 2025-2026. The town’s accountant initially projected a $600,000 deficit for 2026-2027. By law, the Enterprise Fund and General Fund must maintain separate accounts. After lengthy discussion, the council approved both budgets for the fiscal year beginning July 1.

“The two biggest [expense] items in the Enterprise Fund are depreciation and interest,” explained Mayor Greg Maloof.

Interest expense results from borrowing money to repair or replace infrastructure or to fund projects required by the Tennessee Department of Environment of Conservation, Maloof said. Monteagle’s water plant is 50 years old. The sewer plant is 15 years old.

Depreciation refers to an asset’s decrease in value overtime. To provide for replacing assets, the state has begun strictly enforcing a rule requiring water-sewer utilities to fund depreciation, meaning the utility must set aside money to replace an asset based on its current depreciated value.

The 2026-2027 Enterprise Fund budget calls for setting aside $125,000 for replacing water plant assets and $375,000 for replacing sewer plant assets. An outside consultant recommended a 32 percent rate increase to balance the budget.

“We’re not suggesting a 30 percent rate increase,” stressed Alderman Grant Fletcher. “We’re working other ways to reduce capitalized projects to avoid that kind of increase and also to avoid having the state come in and dictate rates.” As proposed at the April meeting, deferring water-sewer related projects can help avoid a loss, albeit perhaps temporarily, by deferring capital expense and deferring the related capital depreciation. There will be a small rate increase July 1 (3-5 percent) in keeping with recommendations from a rate study conducted in 2023.

Lay argued for finding a way to help people on a limited income deal with rate increases. He proposed offering customers a water-audit to educate them about how to reduce water use. The council will look at options during a workshop.

Lay also pointed to $60,00-$65,000 loss in revenue resulting from the rest area on 1-24 being closed for over a year due to a water leak. “That’s 10 percent of the [projected] loss,” Lay observed. Maloof spoke with a state official about the delay in addressing the rest area problem and learned a statewide study of all interstate rest areas was underway. The police department confirmed the interstate accident rate had increased since the rest area was closed. Fletcher suggested advising state officials of safety concerns might speed up the repair process.

General Fund budget revenue comes primarily from sales tax, as well as hotel-motel tax and building permits. The General Fund budget calls for 5 percent wage increase for hourly employees and a 3.5 percent wage increase for salaried employees.

In other business, the council approved an ordinance enabling Codes Enforcement officer Travis Lawyer to serve as a special police officer. Lawyer requested the designation explaining, “It allows me as a building inspector to be able to serve municipal papers, put them in court, and offer testimony.”

The council also approved the revised concept design for an Imagine Monteagle project which combined a proposed information kiosk and a proposed sculpture, with the sculpture as the center focal point of the kiosk patio in the combined design. Fletcher, who heads up the Imagine Monteagle initiative, anticipates grant funding for both the kiosk and sculpture. For the project to move forward, the town’s engineer must approve the sculpture location. The council approved $1,500 for engineering costs.

Reporting on Fire Department operations, Lawyer, who also serves as Fire Chief, said the first-responder EMS program initiated by the Fire Department made 20 calls last month, with a response time of 30 minutes. The program costs an average of $12.80 per call.

Updating the council on the Fire Recovery program adopted in 2024, Lawyer said the town has realized $26,269 from insurance claims. A third-party organization makes insurance claims on the department’s behalf. The department averages 20 interstate calls per month dealing with big trucks. Lawyer only turns in monetary recovery claims for commercial vehicle accidents, not for accidents involving private individuals.

During the Mayor’s Comments portion of the meeting, Maloof designated Alderman Nate Wilson to serve on the Planning Commission in his stead. He also urged residents to stop putting plastic bags in the plastic recycling bin at the Convenience Center. The bin is only for plastic containers with recycling codes one or two. Franklin County which provides the service may remove the bin if the practice continues.

The Beautification and Tree Board anticipates the Fire Hall mural will be completed by the end of summer, said committee chair Martha Ann Pilcher. Pilcher urged organizations and groups to have a float in the July 4 parade celebrating the nation’s 250th anniversary.

In response to a request from Linda Brookhart, the town’s representative on the Chamber of Commerce, the council approved $1,455 for the purchase of three banners advertising the Monteagle Mountain Market, with the cost charged against the Imagine Monteagle fund. Addressing an earlier controversy, Brookhart said the event will continue to be called the Monteagle Mountain Market, not the Mountain Market as was proposed.