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Archive for Friday, July 9, 2010

Report questions city’s water and sewer fund transfer rates

A report from auditors is calling for city leaders to keep a closer eye on water and sewer rates in Lawrence. The report questions whether the city is doing enough to monitor how the fees are spent.

July 9, 2010

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As city commissioners consider increasing water and sewer rates, the city’s auditor is calling for more transparency in how rate dollars are spent.

City Auditor Michael Eglinski issued a new report that questions whether the city is doing enough to ensure that money is not being transferred out of the city’s water and sewer account to fund broader governmental purposes.

“It is a lot of money,” Eglinski said of the transfers. “I guess that is the simple answer of why we need a policy, and there has been a big increase in the transfers in recent years.”

Eglinski is calling for the City Commission to adopt a formal transfer policy for the city’s business enterprise funds, which are funds that charge fees instead of taxes to support themselves. The city’s water and sewer utility is the biggest enterprise fund, but the city’s trash service, golf course, parking system and stormwater utility all fall under the business enterprise category too.

High transfer rates

In 2007, the first budget prepared by City Manager David Corliss, the city transferred $4.2 million in fees into the city’s general government accounts. That was more than double the amount in 2006. The transfers have been near $4 million both in 2008 and 2009.

Eglinski compared Lawrence’s transfers to 16 other similar university communities. Lawrence transferred a larger percentage of its fee dollars than any of the other cities.

A formal transfer policy would give ratepayers — in the case of water and sewer, for example — assurances that the money is being used to help pay for legitimate costs related to the utilities instead of subsidizing activities that should be paid for through taxes.

“It really just is a transparency issue,” Eglinski said.

Corliss said he’s confident the transfers have been legitimate. He said it is fair for the utilities and divisions to reimburse other city departments for functions that they would have to have if they were stand-alone business entities. For example, the city’s utilities department relies on the city’s legal services department for legal work, the city’s information technology department for computer services and the public works department for some types of building maintenance.

‘Stronger rationale’

Corliss said a larger expense, though, is that when the utilities department undertakes major waterline or sewer work — think of the downtown waterline replacement — it often involves work from many city departments that deserve to be reimbursed. Corliss said an increase in the number of large capital improvement projects is why the transfers has increased significantly since 2006.

But Corliss said he will prepare a policy for commissioners to consider.

“I think it is worthwhile to have a policy in place to provide a stronger rationale for why the transfers occur,” Corliss said.

Corliss didn’t provide a timeline for when the policy would be completed. Eglinski first made the recommendation that a policy be created in 2008. Eglinski said he decided to renew his call for the policy after it became clear one was not being developed.

City Commissioner Rob Chestnut said he thinks it is time to adopt a policy.

“It makes a lot of sense from a policy of transparency standpoint,” Chestnut said.

Chestnut said the issue may be particularly important now as commissioners are considering another round of rate increases for the water and sewer system. As part of the 2011 budget, commissioners will consider a 6 percent increase in water rates and a 2 percent increase in sewer rates.

Staff members have said the city could go without rate increases in 2011, but it would require the city to largely forgo its capital improvement and maintenance program for the water and sewer system.

Commissioners will finalize the budget and the rates by early August.

Comments

kansasredlegs 4 years, 5 months ago

Mr. Corliss: If you truly believe that other departments should be reimbursed for legitimate costs, i.e. police officer time for traffic control, etc., associated with the utility department then show us Taxpayers the breakdown of those costs. Should be pretty simple since I would presume the ledger justifying such transfers had already been done when you requested the transfers in the first place.

LJW: Request the ledgers!!! I don't think Mr. Corliss will be able to produce since the transfers were approximately the same each time so, just a money grab. Maybe Mayor Amyx can employ Professor McAllister to explain away again.

LogicMan 4 years, 5 months ago

Institutional memory question:

Rates were raised a lot to pay for the new southside wastewater plant. Since construction on that stopped, where's the funds being collected for it being held? Hopefully in trust so that they aren't misspent?

lokalyokal 4 years, 5 months ago

Water/Sewer rates in Lawrence are extremely high compared to other cities. The LJWorld could do us all a favor and shine some light on this by doing a little research and publish it in the paper. The sewer system and water lines are not really that well maintained. A water or sewer lines rarely get fixed until it is an "emergency" or until they are forced to. Still, I am quite thankful when I turn on the faucet and fresh water comes out, but it seems there are some accountability issues with a few million dollars that need further explanation. Too bad this issue does not receive the same attention as 20000 missing basketball tickets.

misseve 4 years, 5 months ago

Looking at my $58 water bill and seeing that only about $15 of it is ACTUAL water , I would like to know "exactly" where my money goes...

Someone please enlighten us and not LIE to us

ps to the forum bashers I do read the rest of the bill, just didnt want to bore you all with the details

skinny 4 years, 5 months ago

I second that, Great job, Eglinski! Maybe we need to have the KBI come in and do an audit as there looks to have been a crime here!

Practicality 4 years, 5 months ago

Man, with water and sewer rates projecting to rise, property tax increases, and a higher sales tax, the only people that will be able to afford to live in Lawrence in two years will be named Lew Perkins and Bill Self.

NotASquishHead 4 years, 5 months ago

I never really cared for the idea of an auditor, but this may have just proven me wrong. Very nice work.

I know several city employees in different departments, each of whom has spoken of how badly the c.m. treats employees and what a snake he is in how he goes about things. This article makes it appear as though he has been doing the same thing to all of us normal citizens. Might be time for new leadership.

bearded_gnome 4 years, 5 months ago

it is not the city's, or the water departments', job to "make me feel better!"

paleeeeeez! if the money went to the water and trash etc., fine, if it went to legit expenses incurred by other city departments working with them, fine.

if the money is just a slush fund and they're squishing the money around like spray cheese, then shame on them.

water/trash rates are high enough. they are not there to balance the city's checkbook.

Richard Heckler 4 years, 5 months ago

Taxpayers should be allowed to vote for or against all new capital improvement projects and rate increases. Nothing moves forward without voter approval. This would include USD 497.

New capital improvement projects are in fact increasing the tax bills. There is no way to get a budget under control when there is constant expansion of the infrastructure.

Adding miles and miles of new water and sewer lines is no way to rein the budget. Adding more and more homes for trash service will never allow the budget to become stable.

No one has a clue when the economy will bounce back so why are commissioners approving new tax increases by way of new capital improvements? Who will be paying for these increases?

National surveys (through American Farmland Trust) show that county costs in services required by farmland and open space generally is only 35 to 60¢ for every $1.00 in revenues they generate, producing a net gain for counties.

In contrast, residential use in counties costs $1.11 to $1.60 in services for every $1.00 generated.

I say the Lawrence/Douglas County current budget crunch can be tied directly to infrastructure expenses needed to serve new housing developments.

If residential growth paid for itself and was financially positive, we would not be in a budget crunch. But with increased numbers of houses you have increased demand on services, and historically the funding of revenues generated by residential does not pay for the services, they require from a municipality.

Taxpayers should be allowed to vote for or against all new capital improvement projects and rate increases. Nothing moves forward without voter approval.

Politicians are and have been very busy over extending local taxpayers.

Hoots 4 years, 5 months ago

They were doing the same thing with building permit fees and I believe inspection fees for rentals several years ago and they ended up settling out of court by refunding if I remember right. Just like the federal government has spent funds from social security on other things. Just can't stand having a pile of unspent money.

Richard Heckler 4 years, 5 months ago

So when is this report going to surface. Using water,trash and sewer rates to keep the bills paid is not exactly keeping taxes in check.

Richard Heckler 4 years, 5 months ago

Is this going to be a City Commission agenda item giving the city manager some direction?

Is the LJW going to keep tabs on this matter?

Does Lawrence need a very active tax dollar watch dog group?

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