2020/2021 financial audit reveals Exeter’s general fund, reserves, enterprise funds improving, though water fund still in operating loss and staffing is low
EXETER – Exeter’s fiscal year 2020/2021 audit is in and the pennies from their new one-cent sales tax are piling up, helping the city improve its financial picture.
Measure P is the one-cent sales tax to pay for essential government services like emergency response, crime prevention, parks and public areas and street and road repairs, passed by voters in 2020. Though the ongoing pandemic stymied Exeter’s sales tax revenue by 2% from the year prior, Measure P still brought in $385,649 in the short time it’s been in effect–since April 2021–well above the anticipated $212,750. The money has been budgeted for public safety and city infrastructure needs, namely a code enforcement officer vehicle and equipment, and administration and police department building repairs and improvements.
The city’s general fund reserves are trending upward, ending at $2,314,486, or 55%, on the fiscal year. At the Dec. 14 council meeting reviewing the financial audit, Exeter’s new finance director Rainbow Moore said the reserves are looking good from being in the hole 2.2% just five years ago.
“The reserve is rebounding really fast,” Moore said. “Property tax revenue has been growing steadily by 5% to 6%, which is great news because it accounts for 45% of our general fund revenue. Utility user tax revenue is now about 12% of our revenue, which is something to keep an eye on and has been steadily growing between the 3% to 8% range.”
The city received a “moderate risk” rating from the State Auditor’s Fiscal Health of CA Cities web site—ranked 152 out of 471 cities, higher than Tulare, Lindsay, Dinuba, Clovis, Fresno and Bakersfield—but the news isn’t all sunshine and rainbows. Moore said the city’s improving financial picture has come with cuts to staffing. The city currently has job flyers out for deputy city clerk, recreation coordinator and accounting assistant.
“We have a really low staffing level,” Moore said. “I feel it on the finance team, the admin team, public works and PD are all feeling it.”
The turn of the new year marked water and sewer rate increases for Exeter residents, which will continue to go up yearly through 2024. The city’s enterprise funds as a whole are trending upward, though Exeter’s water enterprise fund remains in an operating loss, meaning expenses exceeded revenue by $152,637.
“That’s because we’re trying to catch up on some deferred capital improvement needs, it had to happen,” Moore said. “The sewer fund is finally in the black, we’re reserved at 11%, which is great news. By 2024, which is when all the rate increases are completed, we should be able to reach a 25% reserve level for water, sewer and sanitation funds.”
City Administrator Adam Ennis said the rate increases are to help keep the enterprise funds out of the hole.
“What we’ll do is we will continue to adjust the amount of capital improvements we do each year to not have them down in the hole, but do as much of that work as we can as the rates go up so we can keep improving the systems and making them more reliable and a lot less vulnerable,” Ennis said.
Fiscal-year 2017 saw the water fund at $976,461 with over 63% in reserves, to then being $36,474 in the hole with -1.75% reserves by fiscal-year 2019, around the time the city updated its water system master plan, which identified some serious shortcomings in Exeter’s water infrastructure.
Exeter identified about $15 million in short-term and long-term capital improvement projects—replacing all of the old, leaky water pipelines in the city, drilling new wells and repairing old ones, to name a few—and the city appears to be on its way to being able to whittle away at these projects from increasing rates and refinancing their water and sewer debt with the US Department of Agriculture.
But Exeter is also on a short timetable with the California State Water Resources Control Board, who in August gave Exeter six months to hash out a voluntary water system consolidation with their neighbors a mile down the road in Tooleville, who has suffered from undrinkable water for decades.
If the city of Exeter can come to voluntary terms with Tooleville by February 2022, in addition to receiving $2,500 per Exeter service connection—over $8 million—for a needed water infrastructure project, the city would be eligible for a $10 million, 0% interest loan to be used to update their own water system. The state could also fork out up to $80,000 per Tooleville connection—roughly $6.6 million—to cover construction costs for consolidation.