Colorado Springs Utilities will slash $37.2 million in spending and propose a $20 million water rate hike to offset a projected revenue shortfall this year brought on by the sour economy.Most of the cuts would affect operations and maintenance, including deferred vehicle and equipment purchases, delayed upkeep on facilities such as dams and electric distribution systems, cuts in spending promoting conservation, improvements to fire hydrants and staff travel. Some work crews will switch to four 10-hour days to save fuel.Jobs aren’t under the ax, although the city-owned agency this year won’t fill 75 percent of the roughly 100 positions that are open.Utilities already eliminated 82 jobs this year and in 2007 in a reduction that targets 200 jobs over five years.Some Springs City Council members, who serve as the Utilities Board, voiced support for modifying Utilities pay-for-performance program, which this year paid workers nearly $10 million in extra pay for their 2007 job performance.”We’re looking under every rock and aspect of our business,” Utilities CEO Jerry Forte told the board. “We don’t see an immediate recovery” in the economy this year or next.The cuts were triggered by drops in water sales of $6.4 million, $23.1 million in revenues from development fees, $6.2 million for line extension reimbursements and $8.9 million being refunded to electricity customers.It’s unclear how much the water rate increase will cost the typical residential customer. Utilities officials will propose a hike in July to cover the loss in development fees, or about $20 million.A public hearing will be held in August, meaning the rate increase likely will become effective before summer ends. The last time water rates went up was in 2007.A rate hike is assured, city officials said, because without one Utilities’ financial condition would deteriorate, pushing borrowing rates up, which could cost the city tens of millions of dollars in interest for years to come.”I don’t see any way to avoid a rate case,” Councilman Jerry Heimlicher said. “We have to do the responsible thing for the community’s long-term good.”Councilman Scott Hente warned of a “death spiral” that could emerge as rates go higher and people use even less water.Forte said managers are watching revenue and expenses monthly, a switch from the past when a budget was based on forecasts made 10 months before budget approval, which led to the current crisis.”These are not easy times,” said Councilman Randy Purvis. “But I’m confident we have a skilled management team and throughout the organization people who are willing to soldier the burden for long-term stability.”The water division isn’t the only service looking to raise rates. Although no details were discussed, utilities officials on Wednesday also outlined projected increases in utilities’ commodities, including coal, gas, gasoline and diesel fuel, copper, aluminum and steel.Transformer prices have nearly tripled in the past four years. Coal prices are projected to double or triple in the next seven years as the city’s coal contracts expire and new prices are negotiated. Utilities’ cost of generating electricity is expected to double in eight years.The reason is increased competition from China, India and other developing countries that demand more commodities to power their economies, Forte said.”We’re doing everything we can internally to hold these costs down,” said Tom Black, chief officer of the energy division. “There’s only so much we can do in this kind of market.”-CONTACT THE WRITER: 636-0238 or pam.zubeck@gazettedev.gazette.com