Durham water customers should expect to pay more next year, primarily due to cleanup regulations for Jordan and Falls lakes.

"We're proposing $30 million in new projects in the next fiscal year," water department Director Don Greeley said this morning. Over the next five years, the water department plans $418 million in capital projects.

Those include rehabilitation for dams, replacing century-old water and sewer mains, and improvements at all the city's water and sewage treatment plants to comply with state and federal standards.

Rate increases won't be set in stone until the council approves its 2012-13 budget in June, but the water and public-works departments had said in early 2011 that increases would be required for several years into the future.

Greeley, speaking at a meeting for City Council members and city department heads, presented two schedules for increasing rates. Option 1 imposed increases of 4 percent each year through fiscal 2017; Option 2 raises rates every other year, by 10 percent.

"Option 2 gives me pause," said Councilman Mike Woodard. "That zero, 10, zero, 10 is too much of a roller coaster ride."

Durham has about 80,000 water customers.

City administrators and council members came away from a Friday meeting on next year's budget with some good news and a good many questions.

The good news was that the city appears poised to finish the current fiscal year on budget, with no need for the sort of last-minute cost-cutting there has been in recent years past.

Most of the questions pertained to dealing with a 2012-13 budget shortfall projected at $2.6 million, and how to fund the "dedicated revenue stream" for low-cost housing that Mayor Bill Bell called for in his State of the City address last Monday.

"Something's going to give," said City Manager Tom Bonfield. "We haven't determined (what) yet."