PSD addresses finances in recent meeting
Public Service District board members reviewed their January bills one by one at a meeting Friday at Jerry Holder's office in Linwood. Board members worked nearly four hours trying to find money in the budget to pay regular monthly bills.
"I think we need to go through this line by line so we know exactly what we're looking at," said PSD president Tom Shipley.
PSD treasurer and secretary Rick Barkley presented the board's current finances and what bills need to be paid this month.
"If you look at the total checking and savings, it says $112,000, but actually the only spendable capital is roughly $26,000 as of today," said Barkley.
Barkley broke down each account and explained its purpose to the board, who hopes to funnel money to other accounts to cover expenses.
"It shows in the depreciation fund there is $14,000. In order to use that money, we have to get approval from the WDA [water development authority]," said Barkley. "It can be used for emergency expenses and break downs. They'll approve it, then the board has to approve it to take any money out."
"Then there's our reserve fund, which is $64,000. That was set up by the IJDC [Infrastructure and Jobs Development Council] through the original $2.5 million loan. They hold that money at the IJDC in case we can't make our monthly payments or quarterly payments," said Barkley.
"The sewer revenue fund is for the loan payment, that goes in every month, $5,320," said Barkley. "At the end of the quarter, the IJDC actually takes it out of our checking account each month, and they hold it for three months. It's called a sweep account, they sweep it clean every three months. We can't touch that money at all."
PSD board members say they have made substantial progress in recent weeks toward building a new wastewater management facility at Linwood.
PSD water plant operator Lloyd Coleman voiced a concern to the board regarding future payment to engineering company Water Water Management, Inc. if its proposal is approved.
"If Rigby's preliminary engineering plan is approved, he has to engineer the new plant before you can go apply for funding. There's going to be a six month period in there when he is going to be generating engineering bills, substantial engineering bills, that we will not have money to pay for. Is he going to wait until the funding is approved to be paid?" asked Coleman.
PSD attorney Christopher Negley answered the question via telephone conference call.
"According to the contract he can wait until it's approved, he has agreed to that. Payment upon conditional approval of the project," said Negley.
"So we should have no more engineering costs until the loan is approved?" asked Coleman.
"That's right," responded PSD board members in unison.
"Well that makes the situation look much better," said Coleman.
Barkley has helped build facilities like this in the past and is cautious about the lengthy process to acquire funding for a project of this scope.
"I've sat through this process three different times - water twice and the sewer once. Every project I have ever seen go for funding, it's at least a year before you get your funding. You have to get your certificate before they'll approve it. You have to get your permits, different things before they'll approve the funding," said Barkley.
PSD board member David Litsey seemed unconcerned about the financial debate and attributed the crunch to costly litigation.
"We the public service district, we the ratepayers, had additional expenses which were incurred while people investigated all of these things. All of a sudden we're starting to pay for that, but things are moving forward," said Litsey. "It takes about $75,000 a month to run this place, it doesn't leave us with a whole lot extra every month, but it does leave us some."
Litsey reminded board members that much of the proposed wastewater management project has already been paid for.
"We've paid a lot of money, for example $110,000 for preliminary engineering work, that normally is part of the loan. We've spent money on land acquisition, which normally would become part of the loan. We need to account for those things so we can make sure that they get included when the loan goes forward. That money then comes back into the Public Service District so that we can utilize that money effectively for maintenance and replacing things before they put us in a lurch," he said.
Litsey says the board's finances will be in line with the annual budget if they can collect the money that is due from commercial and residential ratepayers.
"We should be able to move forward. I think we're on the right track. We'll be fine. We can pay our bills and move forward," he said.
Barkley cautioned the board in including calculations of ratepayers' uncollected fees.
"That's fine and dandy when we get that money back, if and when. The bottom line is we need money for the cash flow. It might come in in six months...or two years. We don't have that money now to spend on bills. That throws the budget completely out of balance. There's no way to balance the budget that I can see right now other than going for basically a rate increase or trying to get a loan, which both have to be approved by the Public Service Commission," said Barkley.
Barkley is skeptical whether the PSD would even be granted a rate increase if they applied through the PSC.
"If you don't have the money to make your loan payment, the first thing you do is go for a rate increase. With everything going on at the PSC; if the PSD were to apply for a rate increase right now, they [PSC] would really scrutinize it. The interim rates were approved for a two year period, a transition period," Barkley said.
"The projected rates were only going to be used for operations and general maintenance of the system until the new system came online. I'm worried if we were to go to the PSC and ask for a rate increase, they're going to come back and say 'this money that was approved for these rates, you all have spent them elsewhere'," he added.
Attorney's fees have been one of the highest costs for the PSD, and the board is only halfway through their fiscal year.
"The attorney in the budget, was budgeted for $58,000. Through the first of December we already spent $59,000. There is nowhere to get any more money out of this budget that I can see. Are we not going to pay Chris [Negley] for the next six months?" asked Barkley.
Litsey said the costly legal fees are a thing of the past and the board should remain within its budget for the remainder of the year.
"I think that we're very, very close to being past the litigation stage. I'm praying that we are, but I believe that we are. The engineering is frozen, we should be dropping back to a more reasonable demand for attorney's services next month," he stated.
PSD board member Amon Tracey says the board needs to be wary of spending.
"If we hold our feet to the fire and quit buying, we'll get out of this. If not, we're sunk," said Tracey.
Shipley said the important thing is to focus on the matter at hand.
"It doesn't matter, right now, how we got there or why we got there, whether we were wise in our decisions or unwise in our decisions. What matters is that these are figures that we need to account for and pay for," Shipley advised.
Coleman informed the board he has been very prudent about recent purchasing, but deeper cuts would mean job loss for employees.
"Since the last meeting, I quit spending. We haven't purchased anything since the last meeting. I intended not to until I discussed it with the board," said Coleman. "At this point, the only expenses we're having are labor, electric, propane, telephone and cell phones, gasoline, chemicals when we need to buy additional chemicals, the rest of it is dependent on whether somethings breaks down or not. To cut any of those, you're talking about laying somebody off."
Shipley believes a more open approach to the PSC may convince them that progress is being made.
"One of the things I think we might consider doing is to put down in writing exactly what we're doing and why we're doing it and share that with the Public Service Commission. The PSC is there to work with public service districts, I think we ought to show them that we had this five hour meeting, that we're taking this action," he said.