(12/10) In accordance with advice given to the Town by the Town’s auditor last month, the Town Council voted unanimously to cancel a $400,000+ loan that it had been carrying in its books from its General fund to its Water and Sewer fund.
No actual money was spent or received by the Town, as the money was lent by itself, to itself, so as Burgess Barnes said: "it’s a paperwork resolution to a long simmering issue."
"By clearing up the loan on the books of the Water Fund." Barnes said, "We’ll be able to get a better idea going forward what the true financial situation is with the Town’s Water and Sewer Fund, and in doing so, get a better understanding of how much it is costing the town to run the water and sewer plant, and to make sure we are at least close to breaking even on cost."
Commissioner Rittlemeyer concurred with Barnes’ desire to get a more accurate picture of how much the Water and Sewer System is costing the town.
Both Barnes and Rittlemeyer went to great lengths to stress that their intention in clearing the loan was not to raise Woodsboro’s water and swerve rates, but simply to allow the Town to do a better job budgeting the cost of running the plants in next year’s budget.
Currently, all expenses associated with running the Town’s water and sewer system, such as electricity, maintenance, equipment replacement costs, chemicals, and waste disposal, are charged directly to the Water and Sewer Fund. While the $75,000/year salary of the support contractor who physically oversees the day-to-day operation of both plants is charged to the Water and Sewer Fund, the salaries of the Town’s two full time employees as well as the Town Manager is charged to the General Fund, regardless of whether or not they are working on items related to the water and sewer system.
The ‘hours’ the Town’s two full time employees work on Water and Sewer operations is tracked and these incremental charges create the bulk of the $400,000 loan to the Water and Sewer Fund that has accumulated over the last 20+ years.
The Town’s auditor told the Council at its November meeting that while in the "perfect world," the water and sewer systems should pay for itself, there is no requirement to do so, and that many small towns, like Woodsboro, often charge staff and office expenses related to working on water and sewer activities to accounts associated with general town affairs. While she complemented the town staff for keeping track of the ‘incremental costs’ associated with town staff working on Water and Sewer activities, she recommended that carrying the costs on the books as a ‘loan’ from one fund to another was "masking" the true cost of running the systems and recommended that the loan between the funds be administratively closed out.
Other towns, like Emmitsburg, have taken a more hard noised approach to the goal of making their water and sewer operations self-sufficient, to the point of billing the cost of stamps and envelopes used to mail out water bills to their water and sewer fund. Even requiring the town’s office receptionist to bill time spent answering a simple phone call from a resident about a water issue to the water and sewer fund.
As a result of this draconian approach, over the years, Emmitsburg drained their water and sewer fund down to a point that it was bordering bankruptcy, while at the same time, its General fund grew, allowing spending on what some considered superficial activities. The need to replenish the water and sewer fund led Emmitsburg to impose a 300% increase in its water rates over the next five years. The rate increase inflamed that community, resulting in a turn over of the Emmitsburg Town Council in October, which is now in the process of reconsidering its prior water and sewer fund charging practices.
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