Lindsay’s water fund is drying up

Lindsay may need to look into completing a rate study for their water fund as they re-evaluate their enterprise funds

LINDSAY – As city staff analyze current finances, they discovered the majority of their funds are in good shape, except their water fund. 

As Lindsay approaches the end of the fiscal year, the finance director and city manager are working to get the water funds flush with cash after years of neglect. The city is performing a number of studies within their finances before they look at a rate study that could possibly raise water rates for those in Lindsay.

“The water fund for the past three years has been showing higher and higher deficits. And this is due to several different reasons,” Juana Espinoza, Lindsay’s finance director said. 

At the May 24 city council meeting, Espinoza presented an update on how finances look in preparation for the 2022-2023 fiscal year. Espinoza said the reason for the major deficits is not from a one time expense, but something that has been happening gradually throughout the years. The entire situation is complicated, but Espioza is taking painstaking measures to ensure the budget can be read in layman’s terms.

The city is currently in the process of diving into specifics of what it costs to run a fully self-sufficient water fund according to City Manager Joe Tanner. “We want each fund to stand on its own and be healthy, and have enough reserves to where if problems or situations come up we can cover that, but then also we can meet our long term maintenance demand,” Tanner said.

One example of an issue in the past, is that the city has not split costs as much as they should have which has led to confusion when attempting to get accurate figures. Tanner said if the city purchased a vehicle for general purposes and water purposes, it should be purchased by a 50/50 split between the general fund and the water fund. In the past, money from the general fund may have been the only funds used, taking nothing from the water fund. This concept is something Tanner said the city is working on improving. 

Espinoza said, “For the current fiscal year the amount of water delinquencies alone is $64,000.” 

Fortunately that is down 40% since the city decided to place delinquent accounts on the county’s property tax rolls. Instead of the city contracting with a collection firm the city hands delinquent accounts to the county who places the balance on the property tax. When the county collects on the balance they hand it over to Lindsay for a nominal administrative fee. 

“The tax rolls, I think, are going to be key to the long term, fiscal stability of all three of those funds, water, sewer and trash,” Tanner said.

As staff take steps to paint a better financial picture for Lindsay, they are currently waiting to hear back from a few studies before they decide to move forward with a rate study. One current study is a cost allocation plan. This plan is the analysis of employee salaries and how they are allocated to each fund, according to Tanner. Each staff member gets paid from whichever fund department they work on, the study is evaluating the accuracy. Tanner said this has not been done in several years.

Additionally the city wants to commission a street impact study over how fixing damaged water lines affects the city’s road. Tanner said repairing water damages in roads reduces the lifespan of a road, “decreases significantly.” 

Once the information from these studies are available, the city will evaluate them and see if there is anything that can be done to save the city some money. If not, Espinoza said there has not been a rate increase since 2015. “The expenditures just keep going up year after year. Looking at inflation alone for this year is 7%. No change to the rates is just not sustainable for the water fund.” Espinoza said. “I’m spending some time on this because I think the seriousness of the issue needs to be impressed.”

Tanner does not want to look at a rate increase until they have collected the most information possible. “I think that would be a disservice to the ratepayers to not have the most accurate information, but then to go out and ask them for a rate increase. That just doesn’t sit well with me and I’m sure it wouldn’t fit well with the residents either.”

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