Elizabeth City’s budget for next year does not currently include water or sewer rate increases but city officials told City Council Monday that future hikes will be needed to repair the aging systems.

“At the present time, we have not budgeted anything for rate increases in the water and sewer fund,” City Finance Director Evelyn Benton told council during a budget work session Monday night.

City Council increased sewer rates by 25 percent and water rates by a separate 2 percent last July. Those rate hikes came following a study by outside consultant Raftelis that showed the city needs $37 million to fund needed improvements over the next 10 years in the water and sewer systems.

The Raftelis study presented to City Council in May 2020 had a 10-year plan for water and sewer hikes. Most of the suggested future rate hikes were more modest from last year’s hikes, at around 2 to 3 percent, to fund the needed improvements.

But Benton noted that the rate study called for a 50-percent sewer hike last year, which council cut in half, and that the city would also have to make up that 25 percent at some point if that is the direction council wants to go in.

City Manager Montre Freeman said rate hikes could be part of a plan city staff is working on to improve the two systems.

Freeman said the city could use a combination of rate hikes, borrowing money and using federal help to fund the improvements recommended in the study, which includes a new sewer plant at some point.

The city is slated to receive $5.2 million over the next three years from the federal government’s $1.9 trillion COVID-19 relief plan and Freeman supports using that money for water and sewer improvements.

“I will be leaning on you (City Council) to talk through that piece of it,” Freeman said. “When we are talking about a plan, what I don’t want is a plan for today. By the time we put that plan into place, it is dated. We are trying to build a plan that will mirror a comprehensive master plan to not only answer our questions for today but also answer our infrastructure questions of tomorrow.”

About half of the $37 million in proposed capital upgrades in the Raftelis study would go toward improving the performance of city sewer lines. Currently, a large amount of rainwater is getting into the wastewater system and that rainwater is then treated as sewer, which taxes the system and could impede future growth.

The Raftelis study found that the city would only add on average 10 new water and sewer hookups every year over the next decade. But Freeman told City Council that he “completely disagrees” with Raftelis’ analysis, saying the number is extremely low.

Freeman said renovation of a runway at the Coast Guard base, growth in the aviation program at Elizabeth City State University as well as other factors will lead to more growth in the city.

“The growth that is already happening, not even considering the growth that will come, we can’t handle it now,” Freeman said.

Councilor Michael Brooks acknowledged that the sewer system needs repair but said City Council needs to move slowly when projecting future growth.

“That’s what it is, a projected growth,” Brooks said. “In years past, council was told that growth pays for growth, but we found that not to be true. We can be optimistic, and it is good to have a positive outlook. We have to look at things from a realistic point of view of what we actually see.”

Councilor Billy Caudle noted that the water and sewer fund currently has a low debt load and that borrowing money and using the federal dollars to begin water and sewer infrastructure is a good option.

“If we are going to borrow money, now is the time to do it,” Caudle said. “This is the time to roll with those projects.’’

Freeman said he doesn’t know how much money to ask for until a plan for improvements is completed.

“It takes time to build those plans,” Freeman said. “There has been no plan prior to now.”