There wasn’t a lot of gaiety during Tuesday’s workshop for Brookings Budget Committee members.

“We have a real challenge in front of us,” said Candace Michel.

That most likely includes raising sewer and water rates for fiscal 2012-13, which starts July 1.

Finance Director Janell Howard gave committee members a scenario that would boost residential sewer rates from the current $50.92 per month to $61.72, and water rates from $20.39 to $22.82.

She emphasized that’s just a starting point for discussions and those jumps are a long way from being imposed. Still, Howard said it would allow committee members to see the kind of budget decisions that lay ahead before a final document is adopted in June.

The potential big jump in sewer rates results from a $1 million annual payment the city must make on its loan for construction of the wastewater treatment plant. In past years, revenue from system development charges – fees on building projects – have paid a significant part of the loan.

But with construction at a virtual standstill, those funds are minimal at best, she said.

Mayor Larry Anderson agreed, saying 50 to 60 housing starts were not uncommon in years past. Now it’s about five per year, he said.

He added that Brookings has been fortunate to pick up some system development charge funding from big construction projects such as Bi-Mart and the medical clinic, but there’s not much on the horizon.

“I don’t think we can count on large construction projects for a while,” he said. “We have to be considerate of the citizens, but also realize that nothing is free. Rate increases are inevitable.”

Another committee member, Sally Lasch, agreed that water and sewer rates must rise.

Those possible increases don’t even factor in any capital projects for water and sewer infrastructure, Howard said.

Other possible cost increases also are in the mix. For example, the city council has been discussing a plan to rewrite the contract with Coos-Curry Electric Cooperative, imposing a franchise fee of up to 5 percent for doing business in the city.

Michel said that also would be borne by citizens in their monthly electric bills.

Residents are “not dumb,” she said, and realize they would end up paying the fee, if it is enacted.

Roger Meader, CEO of the utility, has already said they would have to pass that cost along to balance their budget.

Committee member Dave Gordon said adequate levels of fire and police must be maintained.

“If we want the services, they have to be paid for,” he said. “There has to be enough of those resources to protect families.”

Committee member Jake Pieper said it’s a question of which city services are most essential. He theorized that citizens probably don’t want all the services currently being provided.

Committee member Brent Hodges said sub-contracting some city work might be cost effective. That could include maintenance services of the Parks and Recreation Department, he said.

“The rates are going to have to go up,” he said. That’s a sad fact of life. No one’s going to be happy – business owners, residents or retired people.”