The fact water and sewer rates haven’t increased in Manteca in 15 years has finally caught up with the city.
The proposed budget for the fiscal year starting July 1 projects a $12.5 million deficit in the water fund.
The deficit in the sewer is expected to reach $3.2 million.
The water fund is already in deficit spending. It started going into the red earlier this fiscal year. It is expected to be $.52 million in the hole by June 30.
With needed expenditures of $20.6 million next fiscal year to keep the system operating with only $13.2 million in revenue, the water fund deficit is expected to be at $12.3 million on June 20, 2025.
The sewer fund is expected to have a positive balance of $2.8 million on June 30, 2024.
But with next year’s needed expenditures to operate and maintain the system pegged at $25.6 million and revenues at a projected $19.6 million the fund will end the next fiscal year with a projected $3.2 million deficit.
The water and sewer funds are enterprise accounts separate from the general fund that pays for day-to-day municipal services such as police, fire, street maintenance, parks upkeep and such.
Enterprise accounts rely on rates to cover expenses. Monthly rates collected for water and sewer can not be used for any other purpose. Ultimately, if rates are not increased, the city could be faced with the need to cannibalize general fund revenue to keep the water and sewer systems operating.
The proposed general fund budget for next year before the City Council when they meet Tuesday at 6 p.m. is $73.8 million.
That is up from $72.8 million last year.
The general fund is balanced as proposed.
But in doing so, only 39 of 44 positions department heads indicated are needed to keep services at current levels are proposed to be funded.
Two of the new positions are police officers partially funded by a federal grant and three parks workers.
The city also has $84 million in pressing capital needs that the general fund can’t pay for.
That said, the city — in other parts of the budget that includes restricted funding that is collected and can only be used for specific purposes — will commit $35.2 million to 34 existing projects and $25.7 million to new capital projects.
The revenue funding the endeavors comes from federal and state grants such as $16 million for a homeless navigation center, gas tax restricted to roads, and growth fees for specific proposes among others.
Two rate studies were
launched during 2021
The City Council on October 2021 hired Stantec Consulting Services for $1,048,000 to devise a wastewater master plan and conduct a sewer rate study.
In June 2021, the council obtained the services of HyrdroScience Engineers for just under $1 million to develop a citywide water and water rate study.
There is no doubt rates have to be raised. It’s an assessment built on a number of factors.
*There hasn’t been a water or sewer rate increase since 2009.
*The two enterprise accounts were kept going by inter-fund loans from other accounts such as growth fees collected for new street work that has to legally be paid back with interest.
*Inflation is increasing the cost of ongoing maintenance and operations.
*The city’s utility funds that include solid waste, water, and sewer had roughly $2 million in utility billings that hadn’t been collected as of July 1, 2021.
*There is a need to fund replacement projects going forward for aging pipes and equipment.
The staff report for the October 2021 agenda item indicated the last rate increase was in 2013. That, however, is only true on paper.
The council back in 2008 adopted four annual rate increases for sewer and water that covered projected operating and maintenance costs as well as building up set aside funds for replacement projects.
However, the same council — and the council seated over the next election cycles — subsequently suspended each of the annual hikes that were supposed to go into effect in 2010, 2011, 2012, and 2013 based on the last rate hike studies the city commission.
They did so at the depth of the Great Recession and after they obtained concessions that cutback pay and eliminated agreed upon pay hikes for city workers including those whose jobs are with the city utility divisions that are funded through users who pay into enterprise accounts.
The rationale was the city was cutting costs so they would provide stressed households and businesses with relief by suspending the rate hikes.
Those concessions at the time amounted to a 20 percent reduction in wage costs. Since then the lost wages have been restored and then some.
Then mostly without the knowledge of elected officials city staff instituted interfund borrowing to underwrite major water and wastewater projects to avoid the funds from being depleted.
To contact Dennis Wyatt, email dwyatt@mantecabulletin.com
