The vote was two for and two against, but a proposed hike to Winnipeg's sewer and water rates still moved one step closer to a final decision at city council.

The city's water and waste committee was divided Thursday on a recommendation from the department to raise the rates three per cent in each of the next two years, and another 2.8 per cent in 2022 and 2023.

A tie vote at the committee level does not stop the report from moving forward to a debate and vote by all of city council.

Charleswood-Tuxedo-Westwood Coun. Kevin Klein voted against the increases, along with Elmwood-East Kildonan Coun. Jason Schreyer.

Committee chair Cindy Gilroy (Daniel McIntyre) and Coun. Markus Chambers (St. Norbert) voted in favour.

Klein also made a motion, which did not pass, that would have seen a two per cent reduction in the dividend the city takes from utility bills.

The city currently slices 11 per cent off the revenue it collects for sewer and water rates, and uses that money for other operations.

Coun. Kevin Klein wants to see the dividend the city takes from utility revenue reduced, and wants the money to be targeted to offset cuts proposed for the water and waste department. (John Einarson/CBC)

"You are taking 35, $36 million out of there," Klein told reporters after the committee meeting.

If the city needs to collect more revenue, he said, "let's do it honestly and be open and transparent, and say 'we are going to have to increase our tax base because of this, or our property taxes — we are not going to water and waste [for the funds].'"

Water and waste department managers say the rate increases are needed to pay for massive improvements to the city's North End sewage treatment plant and other upgrades to the sewer system, ordered by the province of Manitoba.

Gilroy defended the increases and also voted against Klein's motion to cut the dividend.

"Last year we did actually move it back one per cent," she said. If council wants to reduce the dividend further, "we've got to find money in our operating [budget] to do that, and as is we are having a difficult time with a hard enough budget."

Gilroy added Winnipeg would still have among the lowest sewer and water rates in the country even after the proposed increase.

Klein says whatever money is collected through the city's dividend on utility rates should be used to offset any cuts the water and waste department may face in the upcoming city budget.

Staying within budget targets would mean a reduction of 16 full-time employees over four years and service reductions in several areas, water and waste managers said during a budget deliberation meeting last November.

City council meets at the end of the month and a budget is expected to be tabled in March.