In a memo to Mayor Sebastian Giuliano and City Finance Director Carl Erlacher, Water and Sewer Director Guy Russo revealed that only two months into a new fiscal year the Sewer Department is out of cash.
In his memo, Russo indicates that because of "(the economy, conservation, lack of usage, wet weather) that total sales are down" to about 6.5% below anticipated revenues. In addition he cites a 7.1% delinquency rate, further anticipated "low sales," anticipated slow collectibles as ongoing issues which will prevent solvency in the near term.
The Sewer Operating Budget is currently out of cash and is owed $1.4 million.
The city is meeting Sewer and Water payroll, but all vendor and supply payments are on hold.
Russo is suggesting a rate increase of $1.45 per thousand cubic feet treated to help make up for the shortfall. This increase would generate $128,000. Another rate increase may be needed in May.
While the lack of revenue is part of the problem, the department has, for at least the past two years, set budget at a higher number than would be available from actual billings. In 2007, the department budgeted $3,730,757 but only billed $3,568,690 resulting in a difference of -$162,000 and an actual shortfall of -$388,446 because of non-collections.
In 2008, the department budgeted $3,960,899 when actual billings were only $3,876,072, a difference of -$84,827 leading to an actual shortfall of -$386,325.
And in 2009, the department budgeted $4,386,272 against anticipated billings of $3,941,888, a difference of -$444,384, and an actual shortfall of -$724,000.
By state statute, the Water Pollution Control Agency (WPCA), the controlling agency for the Water and Sewer Department, is financially autonomous from the city, meaning that once the city has approved a budget, the WPCA is solely responsible for managing expenditures and revenue which applies to that budget.
Among the strategies suggested for making up the shortfall are the rate increase, an immediate loan of half a million dollars from the General Sewer Improvement Fund (which would have to be repaid by fiscal year 2010), an aggressive stance toward collection of unpaid bills (using a collection agency already working for the city), a freeze on filling vacant positions, and cancellation of several sewer projects and the purchase of a new sewer vehicle.
Erlacher will be making a presentation on the Sewer budget crisis at tomorrow's meeting of the WPCA (5:15 PM, Water and Sewer Department headquarters).
The Eye just reported a $2 million dollar reduction for Middletown from the State. Now, we are told we are in debt by another $1.4 million due to poor management from the Water & Sewer department.
ReplyDeleteHow much are both of these going to cost the taxpayers?
What did our local State Representatives do for our town? How about the money the City spends for a lobbiest at the State Capitol? It doesn't seem that is money well spent. State Representative Joe Serra gets paid to look after Middletown. Why then did we take such a large reduction from the State, when he supposedly has so much influence at the Capitol?
Will Middletown's Common Council have to take more money from the balance of the general fund again? We won't have anything left pretty soon.
This is not how the citizens want Middletown to operate.