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City Council Water & Sewer Subcommittee Feb. 18, 2003 Page 8 million dollars worth of debt in 2001 to address the problems that were revealed in that study. Mr. Anderson said there has not been a rate increase since January of 2000, so part of this increase that is going to be recommended is going to be addressing that debt that has been issued and the rates that have not been adjusted to cover it. Mr. Wilson stated that the impression that Mr. Campbell has given him tonight is that production costs does not matter. He then stated that we have a 20% cost for personnel and felt that the city could reduce personnel by two or three people and cut the personnel cost by 2 %. Mr. Wilson said the city needs to attack this a little at a time. Mr. Bell said the debt service and personnel is 58% of the total cost of production not including electricity, transfers, maintenance, chemicals, etc. Mr. Wilson pointed out that nothing can be done with the debt service and the only thing that can be looked at is personnel. Mr. Campbell said that if your production cost is only $0.54 and you cut out 10% you are only cutting a nickle off of $3.19. Mr. Campbell said he keeps the water quality up and the health of the people up and that is what they are obligated to do to maintain water quality and safe water. He stated that if we cut out people we might be jeopardizing the citizens. Mr. Campbell pointed out that the plant has doubled in size since he came to Paris and personnel has not been increased in nine or ten years, and that occurred before the plant size was doubled. Mr. Johns said that this situation is very similar to what they have at Campbell Soup - that there is too much capacity at the Water Treatment Plant and we have to work around that issue. Mr. Johns said the way they would do it is like Mr. Wilson said. You cannot use the debt service because it is fixed, and they were told to reduce their cost by 10 %, then 10% means we have compensate for the debt service. Mr. Johns said they were told there are two given things, safety of the people and quality of the product, but you have do it, you have to come up with a way to do it. Mr. Quarles questioned the possibility of cutting other costs before rates are raised. Mr. Campbell said one thing that the city is doing to improve the efficiency is building another elevated storage tank. Mr. Quarles said you were increasing the debt load with that. Mr. Campbell said yes. Mr. Quarles said you are not cutting cost, why would you do that, you already have