City in hot water over utility fund deficit

Declining city revenues over the past three years have landed local government officials in an uncomfortable position and facing a decision that most politicians hope to avoid.

Upon review by an independent auditing firm, the City of High Springs has learned it may have an emergency on its hands.  Potential rate hikes aren’t anyone’s preference, but they may be inevitable according to city officials.

City Commissioner Eric May explained that the city’s water utility fund has been shrinking since 2008, and according to the audit, it has reached the point that if action isn’t taken immediately to correct the deficit, High Springs will be obligated to declare a state of financial emergency to the state auditor.

The deficit was created when the city began seeing losses in water utility revenue as homes were foreclosed and its customer base shrank. With fewer households and businesses using city water, the fund ceased to replenish itself.

Simultaneously, May said, the city had been making routine transfers from the water account for other budgetary needs, as had been done when the water fund was showing a profit. Because these transfers continued even when revenues dropped, the city is now facing a negative balance.

The issue was raised last summer as the city prepared to approve the budget for the current fiscal year, and the base rate for water was increased by about $3.  The current rate is $6.

A special commission meeting will be held Jan. 31 at 5:30 p.m. at City Hall to discuss possible changes in water rates as well as issues concerning the city’s ongoing sewer project. The meeting is open to the public.

City Manager Jenny Parham confirmed that a rate increase is possible, but nothing has been decided yet.

Commissioner May said the absolute worst case scenario the city would be looking at is raising the base rate by $8, taking the current $6 rate to as high as $14. However, May is hopeful that it won’t come to that.

He hinted at a plan he’s working on that may offer an alternative solution so that the commission won’t have to institute a higher bill for taxpayers, but he wouldn’t elaborate.

While the commission has made it clear they do not want to raise rates, May acknowledged that past commissions refused to raise rates even as the current problem was growing.

The meeting Monday will shed further light on the direction the commission will take.