Jackson residents face slight increases in their utility bills that are aimed to raise about $120,000 more in annual revenue for the town’s water and sewer funds.

Town officials unanimously approved the first reading of an ordinance Monday that would increase water and sewage use rates by 6 percent. The ordinance must be approved two more times before it takes effect.

For Jackson residents, water rates will increase from $1.31 to $1.39 for every 1,000 gallons used. The average residential consumer uses 6,000 gallons of water a month and will see bills increase by about 48 cents. The average rate would go from $15.08 to $15.56, according to a staff report.

In addition to monthly use rates, customers pay a monthly base rate. Those rates also depend on how much water a customer uses.

In January, base rates jumped from $3.30 to $7.22 for most residential water users and from $3.03 to $7.05 for most residential sewer users.

The town also voted Monday to increase sewage use rates. Those rates will increase about 48 cents, from $14.49 to $14.97 a month, according to the report.

The fiscal health of the water and sewer funds has worried town officials for several years.

In the projected budget for fiscal year 2013, town manager Bob McLaurin projected both funds would be depleted by 2016.

“Theoretically, the system needs to pay for itself,” McLaurin said of the increases.

State statute requires that water and sewer rates generate enough income to pay for depreciation, debt and operating costs.

“That fund balance gets depleted through large capital expenditures,” McLaurin said. “But when you start cutting back on capital expenditures, the system starts to deteriorate.”

While McLaurin said the increases will help, they will not solve the problem.

Total water and sewer revenue for fiscal year 2013 is projected to exceed spending by $10,000, but several expensive projects are also slated for this year.

The town budgeted $600,000 for a water main project along East Simpson Avenue and East Hansen Avenue, and $100,000 for sewage pipe replacements near the rodeo grounds.

The town might seek federal grants to help pay for some improvements, McLaurin said.

McLaurin predicted the hikes would take effect in two to three months.