Friday, April 17, 2015

Water Rebate Picture Muddied by CAFR

San Angelo's City Council will entertain yet another recommendation by staff to provide no rebates to water customers. The Comprehensive Annual Financial Report, presented last Council meeting, showed a $10 million profit from selling water.  It also revealed the water fund provided the city $14.5 million in cash during 2014.

The city's balance sheet showed a significant increase in water fund assets:

Total net position in the water fund was $105,537,730 in the current fiscal year, an increase of $7,878,984. Of that balance, $9,462,898 is unrestricted and $16,370,172 is restricted for primarily debt service and asset construction and acquisition. The main cause for the increase was the improvement of drought conditions in the area allowing for more usage by the citizens. 

The sewer fund had an increase of $2,429,371 in net position during the current fiscal year.
Add that Stormwater Fund went up $565,000 in 2014.

I have said before the April and November review times frames ensure a zero rebate for citizens.  In the same fiscal year both months occur before the high use season, which generates most of the city's water revenue and profits.  November occurs after the prior fiscal year close.  The city's 2014 CAFR showed $2.6 million transferred out of the water fund. 

Citizens know how our water bill changed over the last fifteen years.  A mere ten years ago the city charged citizens $22.4 million total in water and sewer fees.  Last year that number reached $39.1 million between water, sewer and stormwater fees.

There's a river of money flowing through the city's various water related funds.  Apparently it only flows one way, from citizens' pockets to city coffers.

Update 4-23-15:  City Council asked no questions about the water fund based on information from last month's CAFR.  

1 comment:

Jim Turner said...

If everything is going properly and the rates are where they should be there should never be a rebate because the the income should just cover the expenses and leave, as our Mayor likes to call it, a rainy day fund to handle any unexpected problems and fluctuations in water usage caused by rain and droughts. If there is enough money in the fund balance for a rebate then we, the water customers, have given the city an interest free loan. The rates were too high for that year. The best time of year to figure out if there should be a rebate is just after the fiscal year books are closed, which puts it in November. If the end of year fund balance is above the threshold a rebate should be issued. April is a bit more of a problem but it puts the decision right before the election so any candidates have to answer to the voters on their vote.

There are two problems with the utility bills. First question what are we paying for besides the utility product/service. We were able to eliminate PILOT, a direct money transfer into the general fund, from the water and sewer bills only to see it reincarnated in the trash and landfill payments. The upfront payment from Republic is PILOT in a new party dress and a different shade of lipstick but it's still the same old pig of adding extra fees (taxes in effect) to a service that a citizen has to buy. And it's regressive because it takes a greater portion of the income from the lowest income bracket.

Second problem is how we spend money on water and the other utilities. Not enough money has been spent on preventive measures so far too much maintenance is put off until major, expensive, repairs are needed.

The cost of utilities on our bill should be what it costs to provide those utilities and nothing extra. The cost of the utilities should be reduced by eliminate projects with poor return on investment a getting ahead of the maintenance curve. Of course that applies to all infrastructure, especially roads.