Atwater struggles with water, sanitation funds

ATWATER -- It's been 20 years since the city raised its water rates, and with the water enterprise fund running at a significant deficit, some city officials think it's time to tackle the issue.

Similarly, the sanitation fund is also lagging.

However, during a meeting last month, the City Council voted down a motion to form an advisory committee to jump-start possible rate increases.

During that meeting, Mayor Joan Faul made a motion to create a citizens advisory committee and initiate the Proposition 218 process to lay the groundwork for rate increases if necessary, but the action was struck down with "no" votes from Mayor Pro Tem Joe Rivero, Councilman Jeff Rivero and Councilman Gary Frago.

Faul said the idea behind the committee was to allow the community to have a say in the process.

"We're headed toward bankruptcy if we don't do something," she said before her motion was voted down.

The action was aimed at reversing a downhill slide the water and sanitation funds have been on in recent years.

The public pays fees into enterprise funds, which would ideally allow the services they provide to be self-sufficient.

But by the end of the 2009-10 fiscal year, the water fund had a loss of $1.7 million, said Glen Carrington, Atwater's finance director. That figure was the most updated number the city had available.

That operating deficit reduced the city's water enterprise fund to $9.4 million from $11.1 million for that year, he said.

The sanitation fund also has been taking a loss and has a deficit of $3.2 million and climbing. The city has been taking money from other enterprise funds to make up for the shortfall.

However, Atwater has issued a request for proposals in hopes of finding a cheaper garbage company. The 10-year garbage contract started in 2003 and expires in December.

"We have a negative operating situation in the water fund and a negative operation situation in the sanitation fund," Carrington explained.

Though the funds are whittling down, he said there's no impact to the general fund.

Costs have gone up, but rates residents pay haven't.

On average this year, residents have paid $66 for sewer, $15.49 for garbage and $27 on water meters, according to city data.

Councilman Craig Mooneyham, who voted in favor of Faul's motion during the March 26 meeting, said the situation isn't one that can be continually pushed off.

"The important thing to realize is there's a structural deficit, meaning that if nothing changes, it (the water fund) continues to lose money," he said.

Though there won't be any major impacts if the funds aren't dealt with immediately, something needs to be done before serious problems arise.

"Is our water fund going to go insolvent over the next year? No," Mooneyham said. "Will we have trouble in three to four years? Yes."

Introducing minor rate increases could be easier for residents to cope with, while implementing a large one-time increase would be more like "tearing the Band-Aid off quick," he noted.

Mooneyham wants to address both funds before the situation turns into an emergency. He added that in Atwater, commercial rates for garbage are lower than in any other surrounding community, meaning the residents are subsidizing the commercial customers.

"I'm fairly sure that a majority of the council supports raising that commercial rate to be more reflective of what neighboring communities are currently charging," he said.

The issue probably will be revisited by the council soon, but it may be hard to find support for a potentially fiery issue during an election year in Atwater.

Reporter Mike North can be reached at (209) 385-2453 or mnorth@mercedsunstar.com.