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You are Viewing an Archived IssuePosted: 09/03/14
Bruce Township officials plug $26,562 deficit from sewer fund
Officials hint at potential rate increases
by CHRIS GRAYSewer rates may rise once again in Bruce Township following a deficit revealed during its annual audit report.
Observer Staff Writer
The Board of Trustees voted 4-1 to use general fund dollars to pay for a $26,562 sewer fund deficit. Trustee Paul Okoniewski was the dissenting vote at the Aug. 20 meeting.
The deficit came up during the audit report for the township's finances. The findings are a repeat of last year's report, which had pointed out the sewer system isn't funding itself. The sewer fund has seen net losses for the past six years.
Aaron Stevens, CPA with Abraham and Gaffney, said the assets for the sewer fund are $279,274, but the liabilities were $848,262.
"You can clearly see the sewer fund's current assets can't cover the current liabilities," he said.
The net position of the sewer fund is $2.5 million, but Stevens said a majority of this is tied up in capital, so it cannot be spent.
"You can't spend your sewer system, so that is why your unrestricted net position is negative," he said.
Because of the deficit, Stevens said the township had to either file a deficit elimination plan with the Department of Treasury or cover the deficit.
Clerk Susan Brockmann said the cost for service is to blame for the increases the township can't cover, but it's also seeing decreases in usage from developments like Springbrook.
Supervisor Richard Cory said adding to that is the expense of recent repairs made to Romeo's wastewater treatment plant, which the township uses through a contract with the village.
The audit shows the township's fund balance increased by $33,680 this year, giving it a cushion to plug the hole. Treasurer Deborah Obrecht suggested covering the deficit with the improvement revolving fund, and should consider raising utility rates.
Okoniewski objected to paying for the deficit because it consists of taxpayer dollars.
"I felt that the burden of the water and sewer debt should not be put on the general taxpayer," he said after the meeting. "They have no use for it."
He added that he believes the contract with Romeo is "poor" and should be re-negotiated, and that there should be a more concerted effort to bring more business.
"It should be self-sufficient," he said of the sewer system.
Stevens said the township will need to keep an eye on its water and sewer funds, and may need to raise rates so this doesn't become a recurring problem.
Cory noted sewer rates were raised by 30 percent last year.
"I thought that was pretty significant, but it wasn't enough," he said.
Despite the sewer issues, Stevens said the auditor's opinion was that the township's financial statements "present fairly in all material respects." This is an unmodified opinion, formerly called an "unqualified" opinion, and is the best opinion to have.
The general fund was tracked at $1.2 million. Of it, $679,961 is unassigned funds, or 56 percent of the township's annual expenditures. Stevens noted revenue increased by $235,000 from last year, most of which is from a 1 percent administration fee.
Intergovernmental funding made up 44 percent of revenue, followed by 36 percent in taxes.
General fund expenses totaled $1.1 million, an increase of $96,000 from the prior year due to capital outlay expenses like computers and carpeting that totaled $42,339.
The majority of expenses, 44 percent, were general government, while 36 percent was public works. Last year's percentages were 51 percent and 25 percent, respectively.
The fire fund was reported at $894,400, and the advanced life support fund at $993,830.
The township's assets for governmental activities is $3.3 million, which can cover its financial obligations about nine times over.
However, the township has $3.5 million in retiree health care. This unfunded retiree healthcare is causing a negative $1.4 million for the township's unrestricted net position.