The city of Mexico will keep its current gross receipts tax on Missouri American Water (MAW) after the company was granted a hefty rate increase last month.

The council unanimously approved the ordinance to keep the rate the same. City staff said keeping the rate the same would generate about $32,000 in additional tax revenue for the water fund. City Administrator Bruce Slagle confirmed for the Ledger that essentially keeping the rate is revenue neutral and will make up for the increased costs to the city.

In May the Missouri Public Service Commission (PSC) approved a rate increase for 86 municipalities across the state including Mexico. The PSC approved a rate increase of 24.7 percent for water users in Mexico. According to city staff, 73 of the 86 cities that got rate increases received an increase of more than 33 percent.

During testimony representatives from MAW testified the rate increases were needed to keep up with costs and to achieve the utility's “revenue requirements.” The testimony by MAW also said the rates need to increase to help curb water usage. 

“The volumetric charges for water service should appropriately reflect the variable cost of providing water service while also providing customers an appropriate incentive to conserve water and manage their bills,” the testimony reads. “Rates should communicate to customers the full cost of providing water service.”

According to city staff, it has been about five years since the last rate increase from MAW.