High Springs looks to bridge gap in revenue shortfall

Money and water.  Society demands one to survive and biology demands the other, and High Springs is running low on both. In a special commission meeting Monday evening, city staff and commissioners, water and wastewater experts, and residents mulled over how to compensate for revenue shortages and what direction the city sewer project should take.

The city’s water utility has been running on a mounting deficit for the past three year, losing revenue in the face of foreclosures and vacant buildings, and budget transfers continue to be made to other city accounts.

As an “enterprise fund,” money from the city water account is transferred as payments to the general fund.  As explained by the city’s finance director Helen McIver, activities performed in the licensing and billing department are budgeted under general funds, but the activities are associated with the water utility, so the water account must reimburse the general fund.

This practice is standard among most comparable local municipalities. However, when the city began experiencing losses in water revenues, it didn’t adjust the transfers proportionately.

Adding to the city’s financial woes is the expense of the community’s ongoing sewer project.

City Commissioner Dean Davis said many residents thought it was a bad idea from the start, but the city entered into an agreement with the USDA’s Rural Development agency for financing of a municipal wastewater treatment system.

The project has been conducted in phases, and the next scheduled phase of the project is on hold pending the validation of an approximately $4 million federal bond to fund it.

Included in the next phase is an expansion of the existing wastewater treatment plant.

Due to the city’s cash shortage, created in part by declining water revenues, there is concern that the city’s bond issuance will not be approved. Without it, construction will be at a standstill until an alternative source of funding can be secured.

Regardless of public opinion on whether expansion of the waste water treatment system is popular, the plant is fast approaching capacity.

If the plant isn’t expanded, the city is at risk of regulation violations and could incur “severe fines” or “the possibility” of the system being shut down, explained city utilities superintendent Don Deadwyler.

If the city can’t produce evidence of financial stability, the bond to fund the sewer plant expansion won’t be issued. City Manager Jenny Parham has yet to hear back on whether the bond has been approved, but for now the waste water treatment plant depends on those funds for the next phase.

Commissioners discussed the possibility of raising water billing rates to bridge the gap of lost revenue. City planner Christian Popoli reviewed the city’s rate history and billing structure, proposing an increase on the base rate, from the current $6 for the first 3,000 gallons used to $14.

Commissioner Eric May estimated the increase would impact about 27 percent of water utility users. Those with higher usage would also see an increase in their bills, he explained, but it would not be as extreme.

“It’s almost like a regressive tax,” he said, “because it hits the minimal users the hardest.”

May said he was against raising rates, and suggested that the city review the general fund and cut costs where possible. This should be done, he said, before passing the financial burden on to the taxpayers.

One resident suggested looking at increasing solid waste rates instead, saying there is a broader customer base and would result in a smaller burden spread over more people.

Parham said it would hypothetically be allowed within city policy.

While the meeting focused on the debate over raising water rates, Jon Dinges of the Suwannee River Water Management District made a presentation about declining groundwater supply in North Florida and the issue of demand surpassing supply. His message was that the entire district, including High Springs, must start looking at alternative water sources and be acutely conscious of water conservation.

Dinges said the city’s sewer system could prove to be a great asset in the future, as reclaimed water can offer multiple uses as an alternative to what’s left in the ground.

No official action was taken during the meeting, and discussion concerning water rates and the city’s financial condition is scheduled to resume at the Feb. 10 commission meeting.