Residents were hit with a double whammy when Mount Isa Mayor Tony McGrady announced ratepayers would have to pick up the tab to manage Lake Moondarra's blue algae problem and face a budget without the annual dividend of Mount Isa Water Board profits.

Mount Isa Water Board chief executive Greg Stevens said historically the Water Board returned a substantial profit back to the state government, which then provided a dividend back to the Mount Isa City Council at its discretion.

After the 2012 election the Newman government stopped the dividend payments, but lobbying by Cr McGrady resulted in a special deal that would continue to deliver a percentage of the profits to Mount Isa City Council each year.

Mr Stevens said significant costs associated with the lease and operation of the Ultra Filtration Plant since December were likely to relate to a small profit at the end of the 2013-14 financial year.

``The unit has been in place since Christmas and we've been incurring those costs,'' he said.

``Mount Isa Water Board is investigating a water treatment plant option assessment with the plan to construct a long-term water treatment plant to suit the needs of Mount Isa's raw water supply,'' he said.

``That plant will have lower operational costs.

``At the moment we're leasing a short-term unit which has a higher cost.'' 

Once the Mount Isa City Council passes its budget the full cost of leasing and running the filtration plant will fall on the ratepayer.

Cr McGrady said each household should expect to pay an extra $440 on top of their normal water rates for the year but vowed to lift the levy as soon as conditions at Lake Moondarra changed.

Mr Stevens said the city had enough reliable water reserves in Lake Julius to last until next year.