BIRMINGHAM, Alabama -- Birmingham Water Works customers beginning in January will pay 4.9 percent more for service, while utility employees are set to receive 4 percent pay raises.

The 2013 Water Works budget is $94.1 million. The spending plan includes $1.24 million for merit and general wage raises for the utility's employees.

Those raises are higher than the current fiscal year when the board approved 3.25 percent pay increases.

Water rate increases for the utility's customers come at the same time Jefferson County officials are considering increases in sewer rates.

The water rate hike, which officials estimate will add $2.05 a month on an average bill, is part of the utility's five-year plan of annual increases.

"This is the same rate increase that we projected in our previous year five- year plan," said General Manager Mac Underwood. "Management is pleased with the approval of the 2013 budget because the 4.9 percent rate increase is sufficient to cover our budgeted expenditures and allows us to properly provide service to our customers."

The Water Works utility projects rate increases of 3.9 percent for each of the next three fiscal years.

Jefferson County commissioners are considering a proposal that would increase average sewer customers' bills between 12 and 46 cents a month. Commissioners have called the proposal more palatable than the 25 percent increase per year for three years proposed last year by sewer receiver John Young.

While a separate entity, the Water Works remains closely associated with the sewer system because of a decades-old agreement where the Water Works handles billing for joint water and sewer customers.

"Last week, we were made aware that Jefferson County is considering a rate increase for its sewer customers," Underwood said. "During our cost of service study in 2011, we completed a sensitivity analysis which considered a possible sewer rate increase."

Board member Anthony Barnes said the utility always tries to balance the need to compensate employees with limiting the financial burden on customers.

"We're always sensitive to the needs of the consumer, but we also realize that to keep good qualified employees we have to pay them decent salaries," Barnes said. "We have some of the best employees in the world. I don't begrudge paying them what they're worth."

In light of pending sewer rate increases, Barnes said the Water Works is an independent entity and must act in its best interests.

"We can't run our water system based on what the sewer people do otherwise we'll end up just like the sewer people - in trouble," he said.

Board member Ann Florie called the Water Works budget imperfect, but said the board has committed to a new process to help control costs and improve efficiency, all measures that would save money.

"Let me be clear, I do not take raising rates on our customers lightly, especially in this economy. Prior to voting for the budget, the board committed to a new process that is designed to help us control costs and operate more efficiently," Florie said. "The way we operate now is unsustainable without continued rate increases. It is our responsibility to make certain that the public is kept informed as to effectiveness of this process."

Florie called it incumbent upon the board to monitor revenues and expenses and make cuts when possible throughout the fiscal year.

"Just because it is in the budget does not mean that it has to be spent," she said.