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Archive for Sunday, August 7, 2011

City auditor encourages policy for distribution of rate dollars

August 7, 2011

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You probably already know that those water and sewer bills you pay to the city of Lawrence likely will be a bit higher next year.

City commissioners at their meeting Tuesday are expected to finalize 2 percent increases for both water and sewer rates for 2012.

What may be a surprise, though, is some of that extra money you’ll pay will go to help other city departments — ranging from the folks who fix streets to the attorneys who keep the city’s legal affairs in line.

In 2012, the city is budgeted to take $3.08 million the city receives in water and sewer rates and disperse it to other city departments. That fact isn’t particularly unusual. Cities across the country make similar types of transfers, but now the practice in Lawrence is drawing concern after the city auditor in 2008 highlighted that the city has no policy for determining how many rate dollars ought to be diverted.

Three years later, the city still doesn’t have a policy.

“I would hope one gets implemented soon,” City Auditor Michael Eglinski said.

It may just sound like a paper-pushing thing, but proponents of a policy say it is needed to ensure that water and sewer rates aren’t used as a way to pay for services that really ought to be supported by taxes.

“It would add more accountability to the process,” said Bobbie Flory, executive director of the Lawrence Home Builders Association. “When people don’t know where the money is going or how it is being used, then we become uneasy.”

The home builders have taken an interest in the issue as they battle against a proposed 11 percent increase in city fees charged when new homes hook onto the city’s water and sewer system. The one-time fees, which are set to go up by about $340, also will be decided at Tuesday’s meeting.

City Manager David Corliss said he is confident the city’s rate money is being used appropriately. Corliss said many cities make similar transfers under the premise that a city-owned utility department benefits from city services. And since a city-owned utility department doesn’t pay any taxes or franchise fees, it ought to transfer some of its rate money back to the general government.

Corliss said some of the bigger costs in Lawrence involve the time and material the city’s Public Works Department spends on fixing streets after a water main break. But he said other city departments should be reimbursed for services provided to the utility department, such as computer services, legal services, payroll services and a host of other administrative functions.

“We believe it is appropriate for the utility to pay some money related to helping us cover those costs,” Corliss said.

Flory said she agrees some transfers are appropriate.

“But it would be helpful to have a policy that sets some parameters,” Flory said.

Corliss in past years has agreed with Eglinski’s recommendation that a policy should be created. But Corliss last week said creation of a policy is time-consuming because he wants it to be comprehensive. He said he’s directed staff to create a policy that looks at how much the utility would pay the city if it were an investor-owned utility that is charged taxes and franchise fees.

Corliss said he now expects to present a policy to city commissioners in the fall.

Some commissioners said they thought such a policy would be helpful, especially since the amount of the transfers has been on a steady increase since 2007.

“I know I have had quite a few questions about the transfer in my own mind,” said first-term City Commissioner Hugh Carter. “It is something I have told myself that I need to learn more about.”

Eglinski currently is working on a new audit that will examine the transfer topic and other financial issues. When he last studied the issue, Eglinski compared Lawrence to 16 other university communities. He found Lawrence transferred a larger percentage of its fee and rate dollars than any of the other cities.

City commissioners meet at 6:35 p.m. Tuesday at City Hall.

Comments

Cant_have_it_both_ways 3 years, 4 months ago

Another creative way to fund raises for city employees.

Cant_have_it_both_ways 3 years, 4 months ago

You have got to be kidding. There are many good people in unions. But there are far more that would be lucky to hold a job with out a union. If you are worth a crap at your job, and frankly, at life in general, you don't need a union to keep you employed.

cowboy 3 years, 4 months ago

The city has generated a small fortune from water revenues over the past decade yet continue to tell the public that they must raise rates to fund necessary improvements. They have these sewer rates that no one can justify or understand. The public has been taken for a ride on this and we should demand a full and independent audit of utility revenues and their use in the city budget. The city fathers are incapable of performing an independent audit.

Fred Mertz 3 years, 4 months ago

Amazing that this is a lingering issue. They make it sound complicated, but it isn't. Here is the policy.

1.No funds shall be diverted or transferred to other programs except administrative or support programs.

  1. Funds may be transferred to administrative or support programs provided an analysis to determine the costs of services provided is completed and the amount of funds shall not exceed the actual costs determined in the analysis.

  2. An analysis of the costs shall be conducted every three years or whenever an increase in the amount of funds sought exceeds 5 percent of the prior year.

  3. One time expenses shall not be included in the amount of funds transferred except in the year they actually occurred.

  4. Funds shall not be transferred to other departments for costs incurred related to the water department, when the costs were incurred for work normally performed by that department.

There, took me 2 minutes and I think I probably covered most of what is needed to be in it.

KU_cynic 3 years, 4 months ago

"I'm shocked, shocked that gambling is going on in here!"

Let me get this right: we're all being overcharged for water and sewer so that the city can administer a nice little unaudited, not justified slush fund for "other expenses?"

That's just not right. Yes, the city should be able to recover shared administrative overhead (such as payroll administration) out of water and sewer fees, but only a reasonable amount that would be based on an audited and fully transparent accounting.

A reasonable person would think that would be a stewardship duty of the city commission; but apparently that's not the way things are run in our little hamlet.

LadyJ 3 years, 4 months ago

Wasn't there something about the same practice with the Sanitation Dept money?

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