Sunday, May 19, 2013

Water Operating Fund: Lost Decade Found

Months ago San Angelo City Councilman Dwain Morrison asked for an explanation on the water operating fund and why citizens rarely got a rebate.  The resulting presentation seemed sparse.

Wanting more information I perused City budgets and audited annual reports.  I looked hard, but could not find the two bits of information I desired, the Water Operating Fund balance at fiscal year start and end.  City staff kindly provided that information.

Only once in the last decade did the Water Operating Fund end/start off negative.  That was in 2004.  Every other year the Water Operating Fund was in the black. 

The City enacted water rate increases in 2007 and 2011.  Also in 2011 the City conducted a "one-time transfer of $3.5 million into general fund reserves from the water utility."  Those items are pictured below.

Given the actual Water Operating Fund balances weren't in the annual financial audit, this information could be new to City Council members.

For those who like raw data, I offer the audited figures as well as budget estimates, (which City Council members saw during the budget process):

Looking at audited vs. budget numbers one can see a lag in the two lines.  However, something changed the last two years, when the city experienced major increases in actual water operating funds vs. budget.

Another noteworthy item for the last two years are budgeted transfers out of the Water Operating Fund, $5.4 million and $6.1 million.  It's not clear how these transfers are reflected in the charts or graphs pictured here.  Such transfers likely relate to the city's debt obligations for the Hickory pipeline and planned new water treatment plant.

While my curiosity may be greater than the average citizen, I expected something along these lines in response to any City Councilperson's inquiry.  It happened the one who asked is still in the running for Mayor.  .  


Jim Turner said...

If I'm not mistaken, that $3.5 million transfer from the water and sewer funds didn't happen. It was asked for during Micheal Dane's budget workshops while he was interim city manager but was not approved. Staff might have told Fitch it was being considered but I don't remember it being approved. The consensus of council was that water fund should only pay for water related projects and that there were plenty of water projects to spend any surplus on.

I think this was an attempt to resurrect a yearly fund transfer from water to the general fund they called Pilot. Seems some in staff are not happy that your water bill is no longer a revenue stream for general fund projects.

PEU Report/State of the Division said...

Jim, Michael Dane referred to a one time transfer of "excess fund balance" to capital projects. It didn't show what year or the amount. Might that be the $3.5 million Fitch Ratings cited? If it's not, do you know the year and amount?

Jim Turner said...

The "excess fund balance" transfer was from the water operating fund to the water capital projects fund. Moved money to pay for water capital projects instead of giving a rebate. There is a Water capital fund which is separate from the General Capital projects fund.

Fitch says the transfer happened in FY 2011. Not finding it in the budget or agendas/minutes. Might need a public information request.