Sunday, February 21, 2016

City CAFR to Inform on Huge Pension Liability & Changing Water Fund

The 2015 annual financial audit must project the city of San Angelo's unfunded pension liability.  Past comments by staff and auditors indicate this number will be significant.

The timing of the presentation will be interesting as City Council just made a decision to borrow $80 million over a nine year period to repair the city's crumbling streets.

Two weeks ago City staff proposed Council lock up another $136 million on treating sewage water to drinkable standards.  Council sent this item back to the Water Advisory Board for review and prioritization along with other potential projects that could deliver treatable water.

The 2015 CAFR will also be revealing water wise.  City staff and hired guns used a different definition for water revenues and expenses in the recent study that increased household water rates 55%.  Here's how Water Chief Bill Riley parsed it in a communication with Mayor Morrison:

In 2012 Water Utilities had total revenues of $28,853,141 (amount shown in CAFR); however, $1,500,000 of that was a transfer from COSADC dedicated to debt service along with an additional $4,707,020 which was established through embedded rates within the standard water rates which has been historically strictly designated for capital and transferred directly to the CIP Fund.   Because the projects associated with capital improvements do not start and end within a given fiscal year, the expenses and revenues associated with those capital funds were not shown and only revenues which were available for paying general water operating expenses were shown in the presentation.  The main intent of that graph was to focus on the growing deficit and declining fund balance.
Riley chose not to address the differences between the CAFR and the water rate study for 2013 and 2014.  It's nice to know city staff used different definitions of water revenue and expense when they want to raise our rates vs. meeting government public accounting standards.  That could have been said to the public in Mr. Riley's presentation, but it was not.

The CAFR is coming.  Will the city have any debt capacity by the time it arrives?  City employees should be aware and be prepared to have their voices heard.

Let's hope City Manager Daniel Valenzuela doesn't pull a Harold Dominguez and make them take vacation time to attend the Council meeting.

No comments: