The Times West Virginian

Local News

September 21, 2008

Troubles with water fund affect other services

By Mallory Panuska and Misty Poe

FAIRMONT — The currently troubled state of the city’s deficient water fund has not only created a dismal financial situation as Fairmont council members stare down the barrel at a significant upcoming customer rate increase, but it is also affecting other local services.

City Manager Jim Snider said that a $250,000 city paving project was scrubbed this summer because of money borrowed from the general fund to help the city pay its water bills.

Snider said that while there will still be some streets paved because they are in conjunction with other projects going on within the city, there will be no other paving done until at least next spring.

“We delayed the paving project for this calendar year,” Snider said. “We will try to address it in early spring during this current fiscal year.”

Currently, the city’s water fund is running on an about $400,000 deficit caused by two costly system emergencies during the winter of 2007. But it does not stop there.

Officials said that the city also had to supplement the water fund to pay its bills with $1.2 million from the general fund and $238,000 from the sewer fund over the past year and a half.

And as if that weren’t enough, Snider said that about $400,000 worth of bills within the water fund are past due, and the next bond payment on the $40 million system is due in January.

“We may end up having to transfer some additional monies,” Snider said, explaining that until a rate increase is introduced or the city finds another way to fund its debt, there is no money to pay these bills off.

City finance director Eileen Layman said some cash-flow problems with the water fund can be accounted for from expenses of about $400,000 from the two water crises, including overtime, legal fees and engineering costs. There have also been some short-term improvement projects and upgrades to the storage tanks to prevent future water shortage emergencies.

But in addition to water emergencies, Layman said there are cost-runs for operation and maintenance in the fund, particularly in the transmission and delivery line item.

“That’s your pipes, valves and fittings, and we’ve had some extraordinary overtime costs,” she said.

And although both the general and sewer funds are working with positive cash flows, the money taken from them has put a strain on other funding abilities, Snider said.

“The crisis we have financially is the water fund situation,” Snider said. “The general fund is in a positive cash flow, but we had to borrow money from the general fund, and it limited our ability to fund projects that normally there would be money for.”

“You have to understand the dynamics of the water fund,” Snider also said. “It’s a $3 million operating fund; that’s all it is. And you’re having hundreds of thousands of dollars in non-budgeted expenses. That’s why it’s such a difficult cash-flow problem.”

In addition to the paving project, Snider said the city is also being stringent on hiring new employees and is performing a few other cost-cutting initiatives to try to save some money.

“We haven’t officially designated a hiring freeze. It’s just the administration is not looking to hire anyone right now,” he said. “We are looking at a few things to basically cut back on our spending as much as we can.”

E-mail Mallory Panuska at mpanuska@timeswv.com.

E-mail Misty Poe at mpoe@timeswv.com.

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