Friday, November 24, 2017

City Council Rejects Water Rebate: Rate Increase Vote Next?

San Angelo's City Council continued the decade long string of not offering water rebates to citizens, despite raising water rates at least five times since 2007.

The City enacted water rate increases in 2007, 2011, 2016 and 2017.  Another water increase is coming January 1, 2018.
2007 - Average increase of $13.22 per month
2011 - Average increase of $14.75 per month
2011-2016 - Additional fees of $5.42 per month added.
2016 - Average increase of $5.88 per month
2017 - Average icrease of $6.56 per month.
2018 -Average increase of $7.32 per month
Two more rate increases are planned for 2019 and 2020.  Combined they total $7.96 per month. 

By 2020 San Angelo's City Council will have increased citizen water bills by $61.11 to $79.08 per month.   That's a 340% rate hike over 14 years, an annual 24% increase.

Why no rebate?  One factor is the city shifts water money around before its time to consider a rebate.  Consider this historical fact from Fitch Ratings, the city's bond rating agency:

In 2011 the City conducted a "one-time transfer of $3.5 million into general fund reserves from the water utility." 
Consider what Finance Director Tina Dierschke told Council on 11-21-17:

"The estimated fund balance is our fund balance from September 30th in the Blue Book and we've also taken out the carryovers Council approved in the last meeting as well as any typical year end audit adjustments so that we have a better picture of where the water fund balance really stands."
The Blue Book showed nearly $5.8 in Water Enterprise fund balance as of 9-30-17.  Not once Councilperson asked how that number declined to roughly $3.6 million.  Those with a good memory would recall a $1.2 million carry forward for utility work for street projects.

That leaves $1 million explained away as a typical audit adjustment.  In addition, there was no discussion on the $4 million administrative line item or the $3.5 million in transfers from the water fund for the fiscal year ended 9-30-17. 

I wrote my City Council representative asking about the evaporation of $2.2 million in water funds.  I've heard nothing back.  That was also council's response when asked "any questions?" on this agenda item.  Silence.  Nothing. 

Saturday, November 18, 2017

Water Fund Dries Up: No Rebates Again for Citizens


A cold, dry wind blew $2.2 million from the City of San Angelo's main water fund.  It went from nearly $5.8 million as of September 30th to $3.6 million, according to city finance staff.

The Water Operations Fund estimated fund balance (after estimated year-end adjustments and carryovers) as of September 30, 2017, is $3,585,477 (unaudited).
The memo to City Council refers to a fund that does not exist in accounting documents.

What does exist is the Water Enterprise Fund.  As of 9-30-17 it showed:

The first question is what happened to the $2.2 million?  Staff should clearly explain any adjustments or carryovers to Council and the public.

The goal for the water operations fund is 75 days of expense budget, or $4,781,532.
The goal is to have 75 days cash to meet operating expenses, which came in at $18.8 million for 2016-2017.  The city's water enterprise budget was $4.5 million higher than it actually spent.

Council could consider a different analysis using the City's Bluebook numbers, one that would produce a small rebate for customers.

This is an accounting discussion that involves operational definitions, what numbers mean and how they are figured. City Council's tacking this item will be informative for citizens.

The water rebate comes after two other water related items, raising the deposit for an account by 186% to $100 for most new users and charging 18% interest on late bills.  These are items G and H on the regular agenda.  The water rebate is item L, the last item on the regular agenda.

Most citizens don't have time to show up to council to share their thoughts, especially for items at the end of the regular agenda.  Should any of these issues be important to you please contact your city council person.

Update 11-24-17:  Members of City Council asked no questions on this topic.  Their silence can be viewed here starting at 1:51:25..

Wednesday, November 08, 2017

Council Voted to Increase Water Deposit 186%

San Angelo City Council voted unanimously to raise the water deposit from $35 to $100 for the water meter used by 82% of its customers.  The increased deposit would only apply to new customers.  It would not impact existing users, according to city staff.

Citizens endured repeated large increases in water bills for the past decade, as rates increased multiple times and new fees were added.  Staff said the logic in charging larger deposits was to reduce deadbeat customers.  Yet, the city sends only 2.2% of its annual water revenue to collections each year.

Staff did not share that the city's water fund of $5.7 million is way over its $3.1 million budget.  Citizens funded $2.6 million or 84% more than the city planned.

Five years ago Council entertained a water rebate in its first meeting in November.  This Council nearly tripled the water deposit for most new customers.

The twisted part of the presentation involved using other aspects of the utility bill, sewer, trash and stormwater to push for the higher deposit.

Between the four operating funds the city has over $21.5 million in fund balance as of 9-30-17.  None of this was shared with City Council before it voted to raise the deposit significantly.  Fiscal year end numbers were available as they were shared with the Development Corporation on October 25th.

One has to dig to get the wider story from City Hall.  I'm not sure our current council likes to get their hands dirty.  Thanks to them new water customers will write much bigger deposit checks come January 1.

Sunday, November 05, 2017

Year End Financials Late to City Council

City of San Angelo Finance Director Tina Diershke presented year end financial statements to the Development Corporation on 10-25-17.  Staff will not have that information for City Council on Tuesday, even thought their meeting comes nearly two weeks after the Development Corporation.

Why might this be important?  Citizens expressed concerns about expensive water and trash bills to elected officials.  Several councilpersons seemed interest in current fund balances for those funds during at least one budget meeting.  City staff avoided direct questions and offered nearly year old budget projections vs. actual year to date figures.

November is the time City Council entertains a water bill rebate.  It won't be November 7th. 

Saturday, November 04, 2017

Citizen Water Rebate Not on Council Agenda for 11-7-17

Five years ago City Council discussed a customer water rebate during their first meeting in November (11-6-12).  That topic is not on the agenda for the November 7, 2017 Council meeting.  With one month left in the fiscal year the city held $4.6 million in the main Water fund.  That should be up significantly given September water revenue was nearly $2.6 million. 

Wednesday, November 01, 2017

Water Chief Riley to Retire

The City of San Angelo announced:

Water Utilities Director Bill Riley is retiring from the City of San Angelo, effective Dec. 8.  Riley joined the City in December 2014.
The City spent huge amounts on various consultants during Riley's term as Water Chief.

Prior to joining the City, Riley served as president and general partner of Water Resources Management, LLC, a consulting firm that assisted water utilities with developing strategies for a broad spectrum of operational, management, financial and resource challenges. From 1991-2000, he served as the water/wastewater utilities manager in College Station, where he began his career in 1983. From 2000-02, Riley managed the water and wastewater consulting practice of Reed, Stowe & Yanke, providing financial, management and operations guidance to public sector clients.
Executive Director of Public Works Ricky Dickson waived the licensed engineer requirement to hire Riley.  I can't recall the last time Dickson made a public presentation to the Water Board or City Council.  Might he do so on Riley's replacement?