Last night confusion was in the air as city council once and for all was going to vote on an ordinance to raise water rates 2.5%. City staff, after 2 months of discussing this issue, still seemed bewildered about questions relating to the city water fund.

The purpose of raising water rates is so the city can fulfill its requirement within their bond covenant to keep water fund revenues at 120% of expenditures. This can be accomplished by either raising revenues or reducing expenditures.

Councilman Paul Jenness proposed an alternative to raising water rates by making a motion to utilize $85,000 of the Verizon telecom lawsuit settlement to fund the deficiency in the water fund necessary to remain within the bond covenant. This had been discussed at length in the December meeting, however it was implied previously that the city had no idea when those telecom settlements would come in, when in fact some of that settlement is already in hand with much more of it expected to hit first quarter 2008. The mayor and other council members, in the last meeting, implied that they may be in favor of holding water rates flat if indeed this settlement could be counted on.

Though the spirit of Mr. Jenness’s motion was clearly understood, technically moving money into the water fund would not be the correct procedure. Director of Finance, Linda Tyree seemed very unsure whether that process would help the city remain within the covenant. After 20 minutes of discussion, Mr. Dan Estes (Assistant City Administrator) clearly identified and suggested that in past meetings the discussion was around reducing the TRANSFER OUT of the water fund which coincidentally accomplishes the exact same thing. The finance staff was ill prepared for this meeting, discussion did not differ significantly from the previous meetings.

The city staff is there to support the council not to influence their own agenda. Much of the discussion last night could have been quelled with input and accurate data from the staff…which the council failed to receive. Simply suggesting that council could accomplish the same thing Mr. Jenness was proposing by reducing the monies coming OUT of the water fund should have been suggested long before Mr. Estes brought it up.

Staff seemed confused when asked if the telecom settlement money was earmarked for something else in the 2008 budget. They said “no”, then “yes”, then “no” again. They were unable to advise council on procedure with respect to the bond covenant. The amount of the Verizon settlement keeps changing. In the last meeting we didn’t know when or if those funds would arrive.  This week’s meeting the staff thought we might have them by February 2008, and by the time the meeting ended we had already received $140,000 of those funds in protest. (I would think the protest would be over since the settlement is complete)

The mayor did not want the staff to be lonely in creating a sense of confusion for the meeting. His statement that the city budget is out of balance and is in violation of state statute is probably wrong. This has absolutely nothing to do with balancing the budget. We balanced the budget again this year by pulling cash out of the bank.

What the mayor was trying to say is we need to resolve this. He seemed frustrated that information was still not available to Council. I’m not sure who he was frustrated with though --- the staff for not having answers or the council for asking questions.

It was crystal clear the staff preferred the 2.5% increase. Their answers or lack of answers seemed to attempt to steer the council to vote for the increase. Answers to questions should be accurate and consistent.  The tail can no longer wag the dog in Liberty. Council must have confidence that information they are given to make decisions is good. After last night’s meeting I don’t see how council can feel comfortable making a final decision.

The Liberty Forward Compromise:

First of all, yet to be discussed, is why are we spending our water reserve down to $150,000? To quote one voice of reason “We are one water main break away from insolvency in the water fund.” By reducing the water fund transfer OUT to the general fund we accomplish two things. We remain within the rules of the bond covenant but we also protect the solvency of the water fund. We respectfully disagree with Councilman Phillips that there are better uses of this settlement money. 

It should also be pointed out that staff recklessly proposed spending $250,000 on upgrading 2 different water and sewer trucks shortly before the budget discussions. Council given no reason to distrust staff approved this. (Councilman Parry was the lone dissenter) It seems it would have been much more prudent to include the purchase of those vehicles as part of these discussions. Staff continues to state the water fund is run like a business. This clearly shows that either that isn’t true or this business is being run poorly.

Liberty Forward proposes the following:

1.  A 1% Rate increase

2.  A $75,000 Reduction in the TRANSFER OUT to the  general  fund 2008

3. An escrow of $75,000 of the Verizon settlement for the same reduction in 2009.

In essence this puts a very small increase on the user, while replacing the money for the last vehicle purchase in the water fund. This is not a water fund subsidy. This simply reduces the monies flowing to the general fund, while being more financially prudent with cash reserves in the water fund. This $150,000 would in essence go back into savings. By moving it over 2 years the city is able to continue to massage the bond covenant. Liberty Forward would be in favor of reducing the transfer out of the water fund by $150,000 all at once but we lose the benefit of impacting the bond covenant next year by doing it that way.

We feel as though our solution is mutually beneficial to both sides of the argument and also considers some things that have not been discussed previously with the water fund reserve. 

 

Tell Us What You Think!!!

 

 Check out more at http://www.libertyforward.org.

Thanks Liberty Forward for watching out. No one has ever done this for the citizens. Keep up the good work. I may start attending some Council Meetings!!! :o