Sunday, October 12, 2014

Water Rebate Consideration Time is Now

There is only one time during the year that it makes sense for San Angelo's City Council to consider rebating a portion of their water fees.  It is after the close of September's financials.  It is both the end of the fiscal year and the end of high water usage as summer's heat begins to abate.

Somehow the City's award winning financial department conned Council into examining rebates in April and November of each year.  The November account is paltry or empty.  Finance transfers fund excesses, often in the multi-million dollar range, as part of its year end close (done in October).  April is also too early as it's before the Water Department's big summer months.

Recall have far the water revenue budget was behind earlier this year?  A $2.4 million figure comes to mind.  The just approved City Budget for 2014-2014 shows a projected deficit of $606,608 in the Water Operating/Enterprise Fund for this year.  This is after the transfer out of $6.1 million to other accounts.

Budgets are projections, so the final tape on water revenues could be shared at the October 21st City Council meeting.  I hope it is.  The public deserves to know.  If not October, then the public will hear something in November.  The question is what?

Michael Dane: Well, each April and November we have an ordinance on the books that requires Staff to look at the fund balance in the water fund and to consider whether the rates, the revenue generated warrants, or has created the situation where we can provide a rebate to rate payers. We’re gonna do that in November anyway; we’ll be discussing results of operations, the net income, or the net loss; that’d be the perfect time to discuss this opportunity so, if this passes we’re interpreting this as a “Be ready to discuss this in November when you talk about the water fund balance.”

Watch for what staff brings to the meeting. I expect one month's performance for 2014-15 and their usual delta approach on how 2013-14 ended.  Hopefully, they'll bring more, show budget and actual performance while noting any water fund transfers made.

This may not be the year for rebates, but it's also not the year to raise fees dramatically to make up for a prematurely represented deficit. 


Jim Turner said...

I was at the meetings where the November and April rebate reviews were added to hopefully balance a large rate increase several years ago. The first meeting in November is the right time to review the entire water rate structure and offer any rebates that would be appropriate. The water departments accounting year does end on the end of September. It could take a month to accurately account for all the revenues and expenses, balance the books, and know what the fund balance was at the end of the year. That way complete information, not preliminary, can be used for the decision. If the fund balance is over the 90 day mark, a rebate should be given, or at least some of the maintenance deferred for years can be done. Giving the water department a month to prepare eliminates any excuses that they aren't ready. At least that was the original plan.

PEU Report/State of the Division said...


As always, thank you the information. My memory could be bad, but I recall a prior November presentation showing a very low fund balance, as funds were transferred to other accounts as part of the year end close.

The 11-19-13 minutes from last year show a 75 day mark and a presentation by Morgan in the budget office. That presentation is not on the City's website or Slideshare, so I don't get to check my memory. If you have Morgan's presentation I'd love to see it.

Jim Turner said...

Wasn't so much a presentation packet as it was a memo. It is part of the agenda packet. Last years water fund balance was $2,766,039. The goal was $5,254,948 for a 75 day operating fund.

Funds do get moved between different funds in the water department. That is shown in the budget and the budget amendments that happen throughout the year. Very little can or should leave the water department. The cost allocation system, where the water department pays for legal services provided by the city attorneys office, or help they might get from the road and bridge crews, are example of legitimate expenses. The proposal a couple of years ago to take $2mil from the water and sewer funds to fix roads is not.

The long term goal that several of us have is that what you pay on the water bill is the actual, true cost of getting you water. Nothing more. Nothing less. No backdoor transfers to pet projects (which pilot often was) and no subsidies by other taxes. Water in west Texas is expensive. That cost should be what is on the water bill. Still got a ways to go to get there completely.

Jim Turner said...

Just for more information, you can watch the entire council meeting from Nov 19, 2013 on YouTube. Rebate discussion starts at about 3:00:00