The city would still be $2,500 in debt but the $1 a month increase would generate about $600 a month.
That $600 a month would help build a reserve in case any equipment at the water plant has to be replaced.
Hamby said the overspending resulted from the construction project.
Mayor Henry Halcon didn't like the idea of a rate increase.
He said it would be better to hold off on the increase because the city might be receiving about $500 a month from Rio-Tel Communications. The company is in negotiations with the city to build a communications tower near the water treatment plant.
"I recommended not to increase the rates until we finish negotiations with the communications company and I'm hoping the money will cover the money need," said Halcon this morning.
The issue will come up again in the second council meeting in August.
Before the water rate increase issue was discussed, Antonio Arellano, owner of El Sol Market, stated his opposition to the city establishing an Imperial Irrigation District pay station at City Hall.
His argument was it would not be wise to have two pay stations in such a small city.
Halcon responded, "It's income which the city needs."
Arellano replied he is not interested in the money but in generating more traffic in the store.
Arellano asked the council if it would write a letter to Adelphia Cable, Pacific Bell and the Southern California Gas Co. asking if they would place pay stations at El Sol. Arellano said he would give his IID transactions to the city so the city could collect the money if the city would help him acquire the other pay stations.
Each IID transaction done at City Hall would give the city $1.
Arellano said the store does about five to seven IID transactions a day.
Halcon said, "We have to go out and bring more income to the city, even if it's small amounts. This is going to save us from having to increase rates on the citizens that are struggling right now. This is going to be the issue that will save us from increasing rates."
Councilman Thomas Marquez suggested the item be tabled and the city negotiate with Arellano.
The issue of closing off C, Third and Second streets during school arrival and departure hours was tabled.
Staff Writer Mario Rentería can be reached at 337-3435.