The Niles City Council passed its 2014 budget Monday, but at what cost to the city’s utility customers?

The answer remains murky.

Included in the budget is an increase of the city’s electric PILOT — or payment in lieu of taxes — to 10 percent and the placement of PILOTs of 10 percent on the city’s wastewater and water utilities.

What this means is Niles is essentially taking $800,000 a year from its own utilities to cover a $350,000 shortfall in general fund revenue.

City Administrator Ric Huff said the PILOT plan would cost city utility customers nothing in the first year. However, rates would likely go up based on a rate study to be performed later this year.

The motion concerning the PILOTs passed 5-3 with councilmembers Daniel VandenHeede, Gretchen Bertschy and Tim Skalla opposing.

The extra money generated through the PILOTs will allow the city to hire additional firemen and policemen, while doing some needed capital and maintenance projects, in addition to covering the revenue shortfall.

“As of right now there is now charge to anybody — your electrical bill won’t go up, your water bill won’t go up,” said councilman Scott Clark. “This is actually taking the profit out of utilities and using it for the city’s well being, for the taxpayer’s well being.”

Skalla proposed placing a PILOT on just the wastewater utility, which carries a balance of $2 million. The PILOT would go away after four years and would be able to draw from the extra $2 million, saving utility customers money in the long run.

Skalla said it would provide $364,000 additional general fund revenue.

VandenHeede said he liked Skalla’s idea, especially the aspect where the PILOT would disappear after four years.

“My concern is… these (PILOTs) will never go away,” he said.

VandenHeede also warned that taking $800,000 a year out of the utilities would eventually fall back on its customers.

“We are going to have to raise rates… the only reason we don’t raise rates immediately is there’s always going to be a delay to start collecting this from them,” he said. “When you are taking $800,000 a year out of utilities it’s going to have to come from somewhere.”