LAFAYETTE — LUS Fiber is behind growth projections but the new telecommunications service should soon stabilize, LUS Director Terry Huval told the City-Parish Council on Tuesday.

The comment came as the council reviewed the proposed $28 million budget for LUS Fiber, the city’s video, telephone and Internet fiber-optic service.

“The fact of the matter is that revenues have not come in as fast as expected, but they are coming in,” Huval said.

LUS Fiber served its first customers in February 2009 and was available citywide in November.

“This is still a young, young business in many respects,” Huval said.

There were early glitches with the video service that slowed the initial roll-out, Huval said, but LUS Fiber has seen a 104 percent growth in customers since last year.

“If that pace continues, that gives us enough that we are going to meet all of our long-term requirements,” Huval said.

He declined to give the number of customers, citing competition concerns, and state law does not require the publicly owned service to reveal the figure.

Voters in 2005 approved a plan to borrow $125 million to launch the fiber-optic service.

LUS Fiber has borrowed $110 million so far, but the telecommunications service also owes money to Lafayette Utilities System, the city-owned electric, sewer and water service.

Although both services are owned by the city, a state law regulating the competition of government-owned telecommunications services with private companies prohibits city-parish government from subsidizing LUS Fiber.

Some of the debt that LUS Fiber owes the utilities system is for the purchase of pre-existing city-owned fiber-optic lines and some of the money is for loans, but the City-Parish Finance and Management Department was unable to provide the council with a total figure for how much is owed.

The council last year approved a $5.5 million loan for LUS Fiber, but Huval said Tuesday that no decision has been made on whether LUS Fiber will need to borrow the money.

LUS Fiber’s proposed budget drew a harsh assessment from the only resident to address the City-Parish Council at Tuesday’s budget hearing.

“The bottom line is this: They are piling on debt,” Tim Supple said. “You need to be truthful to the citizens and explain where we are.”

No council members publicly shared the same sense of alarm, but the council did request precise figures for how much LUS Fiber owes the utility system.

Supple characterized the loans from the city’s utilities system as a subsidy for telecommunication’s service in Lafayette.

Huval responded that the loans must be repaid.

The loans from the utilities system are part of a complicated arrangement under which LUS Fiber must charge a tax-like fee similar to the taxes charged by a private telecommunications company — a state law provision meant to protect private companies from unfair government competition.

That added fee is paid to the utilities system as if it were a tax, and then the utilities system loans that money back to LUS Fiber.

Despite the close relationship between the utilities system and LUS Fiber, the debt is real and affects LUS Fiber’s bottom line.

Budget hearings for other city-parish departments continue through the month.

The council is scheduled to adopt the final budget on Sept. 27.

ä ON THE INTERNET:

For a listing of the times and dates of budget hearings, visit, http://www.lafayettela.gov/obcouncil/default.aspx and click on “Budget Meeting Schedule.”