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SEWER & WATER FUNDS EXPLAINED 2-15-17 LMS
During the February 1 meeting of the Salmon City Council, Councilman Neal James questioned how much of the Sewer and Water Fund revenues should be saved for future needs and requested the question be addressed in depth.
In answer, at the February 15 council meeting City Finance Director Amy Fealko presented a detailed summation of Water and Sewer Fund revenues and expenditures. She said that since 2010 water and sewer cash flow figures have remained consistent and that as of the beginning of this year there was approximately $1.8 million in the Sewer Fund. That fund has an annual income of around $849,000 plus $10,000 of miscellaneous income such as hook-up fees.
Annual Sewer system operating expenses run around $450,000 plus the annual $250,000 loan payment to the Department of Environmental Quality. Fealko said that in the next five years the cash flow should amount to approximately $2.6 million. She said in terms of a capital asset the system is valued at $8.6 million which sounds like a lot but figures out to mean if it had to be replaced, the city has only 25 percent of the system’s assets in a holding account.
Fealko said the Water Fund, after estimated annual income, expenditures, DEQ loan payment and bond payment stands at $250,000. The $836,000 annual income for that fund comes from base rate fees, $165,000 from usage and about $10,000 from miscellaneous charges. Water Fund expenditures amount to $525,000 with $50,000 of that amount going to a reserve fund for a scheduled expense. She said the Water Fund has $500,000 in a reserve account for the future replacement of water filters at the water plant.
Total water system assets equal $11 million which Fealko said is not quite 10 percent of its replacement cost. Considering the ever new regulations from DEQ and the Environmental Protection agency and ever present loans required to replace plants and systems she said it doesn’t feel like there is too much money in the account.
James commented that the $2.6 million has come out of someone’s pocket which amounts to people paying for people in the future. He reminded the council that most businesses have maintenance schedules and Council President Jim Baker said the $2.6 million will be used for maintenance due to no significant line replacements since the early 1990’s.
Baker asked City Public Works Superintendent Harry Shanafelt to elaborate. Shanafelt said the Sewer and Water budgets each receive an annual $50,000 for line replacement. Councilman Ken Hill called that more of a fix than an overall plan for replacement of aging lines, which is where the city needs to go.
As to future expenses Shanafelt said he is getting estimates now on a major rehab of the waste water lift station which he expects will cost from $500,000 to $700,000. He went on to say the city’s Wastewater Discharge Permit has been expired for ten to 12 years and when new permits are issued there will be regulations regarding “nutrient removal” which could mean mandated improvements to the most recent plant upgrade. He said, “That two million dollars….that could disappear pretty fast.”
The council agreed a yearly replacement schedule should be initiated which goes over and above the existing maintenance plan. It was also agreed that such a plan should be made available to the public as a way of explaining system finances and showing where the money is to be spent.
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