HOUGHTON — A possible water rate increase was one of the items discussed at the Houghton City Council’s budget work session Wednesday.

The meeting also included discussion of parking, sewer, equipment and employee benefit funds.

The budget for the water fund includes a proposed 5% increase in water rates. The hike would be split between both components of the water charges — the flat meter charge and the amount of water used.

The increase will be the first in the past decade made for inflationary reasons. Other more recent hikes have occurred as necessary to cover debt service from USDA Rural Development loans.

City Manager Eric Waara said the last increase had come three or four years ago prior to Phase 3 water and sewer improvements on College Avenue.

“With inflation right now, between what electric costs are, what material costs area, chlorine, pipe, all of those things, we need to make an adjustment on water rates … we can keep cutting, but eventually that’s going to degrade the system,” Waara said.

Houghton was in the lower midrange of water charges in the Upper Peninsula, according to a Department of Environment, Great Lakes and Energy five-year rate report.

Waara will bring a proposal for the higher rate to the council this summer.

Sewer rates will stay the same. The city is anticipating a 6.2% increase in revenue, driven by slight increases in residential and Michigan Technological University use, and the addition of Green Acres Road customers to Portage Township’s system.

For both the water and sewer funds, the city is budgeting for higher costs for operating supplies, along with increased contracted services to prepare for projects in conjunction with a potential rebuild of MacInnes Drive.

In the parking fund, the city is anticipating about $185,000 in revenue from parking permit rates, up from $150,000 last year. Winter maintenance is budgeted at $116,400, up from $102,300, to accommodate the new plowing regimen in downtown.

Parking systems maintenance will go up, partly to fund new wayfinding signage for the city’s parking.

The equipment fund’s budget has a reduced contribution from the Tax Increment Finance Authority fund in anticipation of retroactive reimbursement of property tax payments to Walmart.

Grant money will come from USDA for a new piece of Department of Public Works equipment and a new police vehicle.

In employee benefits, the city is budgeting for a 7% increase in health insurance costs. Houghton is exploring changing to another provider that could provide the same coverage at a reduced cost.

The public improvement fund will be presented at a later hearing after schedules are finalized for larger contracted projects such as the Lakeshore Drive rehabilitation.