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$250K from sewer fund covers village water deficit

by CJ Carnacchio

January 18, 2012

A significant deficit in Oxford Village's water fund prompted council last week to vote 3-0 to transfer $250,000 from the municipality's sewer fund to cover it.

According to the village's most recent audit report, the water fund had a deficit of $87,353 as of June 30, 2011.

Considering the water fund had a "favorable fund balance" of $155,512 as of June 30, 2010, village Manager Joe Young said the fund was actually decreased by a total of $242,865.

"That's partly due to the fact that our revenues were falling because of the economy and vacant homes," he said.

Young noted the village currently has more than 55 vacant residential and commercial properties, which are not paying into the water system.

Water system operating revenues derived from user fees have gone from $696,250 in 2008 to $640,150 for the current 2011-12 budget, according to Young.

Young indicated water usage among existing customers was also down in 2011, given it was the "wettest year on record," so less people found it necessary to water their lawns and gardens.

Last year, the area received almost 48 inches of precipitation versus the usual average of 36 inches.

Covering the water system's debt payments has put an additional strain on the water fund. In 2008, the village issued a $2.45 million bond to build a new water treatment plant on S. Glaspie St.

Young told council the debt service from that bond alone is more than $200,000. When combined with the other two bond issues related to the water system, Young indicated the village is paying more than $433,000 annually in principal and interest.

"At this time, we don't have sufficient revenues coming in to cover all that cost," the manager said.

To eliminate the $87,353 deficit in the water fund an action required by state law and deal with the rest of the current fiscal year, which ends June 30, Young recommended transferring $250,000 from the village's healthy sewer fund. He noted how the sewer fund currently has a fund balance (or reserves) of $1.42 million.

The other option was to increase water rates, something council has been hoping to avoid doing for as long as possible.

Young reminded council that the water fund situation is going to have to be dealt with at some point. The biggest help would be if the village could add new, paying customers to its water system.

Young said the village can continue to look for other ways to reduce water system costs, but what's left seems "pretty fixed."

He noted how the village had previously cut its water system operating costs by eliminating its in-house staff for the treatment plant, which cost more than $100,000 per year, and contracting with an outside company, which now costs less than $40,000 annually.

"We've made significant reductions in our expenses," Young said. "But again, the revenue's got to be there to cover the cost, especially the debt."

This was not the first time the village has dipped into the sewer fund to help the water system.

Council previously voted to loan the water fund $250,000 payable over a five-year period to cover the water tower painting and repairs, which were done last year.he water tower painting and repairs, which were done last year.