Larry Kline
Havre Daily News
lkline@havredailynews.com
A few wet months last year have left city coffers a little drier, Havre officials said this week.
A solid amount of precipitation in May and June meant Havre residents used less water. As a result, the city did not meet bond requirements that say it must bring in 125 percent of the revenue it needs to operate and maintain its water infrastructure. Less revenue and the cost of improvements to the system left the city's water fund with a balance of about $965,000 at the end of the budget year on June 30 - about $600,000 less than the previous year, city finance director Lowell Swenson said.
When the city has less money in reserve, it has to tighten the belt on repair and replacement costs, public works director Dave Peterson said Tuesday. Fewer dollars in the fund also mean the city may have to find more cash to pay for its share of the waterline replacement portion of the massive First Street reconstruction project set to begin in a year.
The city's failure to meet its budget requirements, coupled with the leaner operating and maintence budget, prompted Havre City Council member Terry Schend on Monday to call for a cost-of-living increase in the city's water rates.
The city is required to bring in about $850,000 in operating revenue to meet the requirements of the bonds in acquired to revamp and expance its water treatment facility, Swenson said. In fiscal year 2005, Havre was about $364,000 short of that requirement.
Public works director Dave Peterson on Tuesday said remaining in compliance with the bond requirement isn't a simple proposition. If the city were to raise rates too high, residents would use less water. Residents use more or less water based on how much rain falls in the summer months, he said.
“If you had a rainy summer, you would be out of compliance,” Peterson said. “If you had a dry summer and sold all kinds of water, you could be in compliance with your bonds.
“It's a tough sell,” he added. “It's not like your TV or your phone. If you don't want to use any water, you don't use it or pay for it. If you don't watch TV for 20 out of 30 days, you're still paying the same bill.”
The $600,000 shrinkage of the water fund was caused both by the loss in operating revenue and capital improvements, Peterson said. The city spent about $250,000 to replace water lines on Seventh Street and Seventh Avenue in 2004, he said.
Less money in the fund means the city will have be less likely to replace water lines - which puts additional strain on the budget because more dollars will be needed to maintain the existing infrastructure, Peterson said.
The city also may have to find additional funding for the waterline replacement portion of the First Street reconstruction project, he said. The city has received a $500,000 Treasure State Endowment Program grant to help pay its $1.9 million share of the project. Havre has some time to come up with the difference - Peterson said the city has until the project is finished in 2009 or 2010 before it has to begin paying for it.
Peterson said he agrees with Schend's call for a cost-of-living increase. He said gradual increases over a few years would make it easier for residents - especially those on fixed incomes - to deal with the higher bills. The yearly increases could be as small as 2 percent he said.
“That's a lot better than waiting five years and saying we need a 15 percent increase,” he said.
The city's last rate increase was in December 2004, when Havre increased its water rate by about 7 percent and its sewer rate by about 12 percent, Swenson said.
The city's failure to meet its bond requirements was outlined in an audit prepared by Hamilton Consulting Group, PLLP of Havre. The audit also showed that the city failed to include an analysis of its financial situation. Swenson, who said his office would have been responsible for writing the analysis, said the city would “work to remedy” the two problems.
The audit was discussed in a meeting of the City Council's Finance Committee and city department heads last week, Swenson said. Three of the four members of the Finance Committee were present. According to state law, meetings that include a quorum of a public board must be open to the public and adequate notice of the meeting is required. Swenson said the meeting was open. He also said he posted notice of the meeting at City Hall.
Typically, the Havre Daily News receives notice of meetings via fax. No notice was received.
At Monday's City Council meeting, resident Charlie Grant said he was upset that the audit was not discussed in front of the public. At the end of the meeting, Havre Mayor Bob Rice said that in the future he would have the audit presented at City Council meetings.
On March 10, the Havre Daily News ran a classified ad announcing that the audit was available for public review at City Hall.
