Council borrows to pay water bill, vows higher rates
Unwilling to pass the water department's bills on to taxpayers, the De Soto City Council agreed to dip into the city utilities reserve account to make up a $150,000 shortfall in the department's 2001 budget.
City Administrator Gerald Cooper said the water department would finish the year $100,000 in the red. Another $50,000 would be needed to pay the department's expenses in January before utiltity payments start to fill the department's coffers, he said.
The water department budget shortfall was not unexpected. The city has made a practice of subsidizing the department with revenue from other utilities and the general fund. The city's 2002 budget subsidizes the department to the tune of $250,000, despite an anticipated 10-percent increase in rates. Still, Cooper said he didn't want the council to write the department a blank check to continue to run in the red.
"I would like you to say this is a loan, not a gift," the city administrator said. "When the water department does get in the black, we can repay it."
Cooper was referring to Mayor Dave Anderson and the city council's announced determination to make the water department pay for itself.
"I think we can get there in two years," Cooper said, noting that still left the department in the red this year.
Council member Linda Zindler objected to the general fund transfer because it would require De Soto residents like herself who were served by Johnson County Rural Water District's No. 1 and 6 to subsidize the water department with four mills of property taxes.
"That's not fair," she said. "We're paying for our water twice."
Zindler seconded a suggestion that the city borrow the money from the city's $1 million utility reserve account, which is funded from the sale of the city's electrical distribution system to Kansas Power and Light.
Cooper said timing made such a loan a possibility, because the fund's certificate of deposit is to mature this month, he said. The city will repay the loan with the interest earned on the re-investment of the remaining $850,000.
To quit subsidizing the water department or repay the loan, the utility will have to earn more money. Council members agree that will mean about a 33 percent increase in rates. City engineer Mike Brungardt did say the city's greater reliance on the water treatment plant at the Sunflower Army Ammunition Plant and the end of expensive services the city has provided the Army in the past will decrease the water department's operating expenses.
But, city council members again stated last Thursday that they are not looking to raise rates across the board. Currently, large water customers are charged at a lower rate than small customers. This runs counter to a recommendation a consultant made to the city in the past and what the state now recommends.
Council member Tim Maniez, who missed the meeting because of illness, said the council started to act on the consultant's recommendation in the past, but didn't follow through.
The council has assigned itself the task of increasing water rates by 10 percent before the first of the year with a schedule that will start to make rates for large and small customers equitable.
Anderson has also asked the council to make a decision on the city's long-term water solution within two or three months. Those choices are to purchase water from an outside producer, renovate the water plant at the Sunflower Army Ammunition Plant or to build a new plant.
Brungardt told the council he is developing the cost estimate for each alternative, which he will share with the council later this month.
Brungardt said he has had conversations with Olathe about the price of purchasing water. It doesn't appear that the city will have excess water to sell long-term, but he said Olathe officials expressed an interest in sharing in De Soto's efforts to increase its water supply, perhaps at Sunflower.
The council scheduled a special meeting for 7 p.m. Nov. 13 at City Hall to discuss water alternatives.