City Water Deficit to Be Cut in Half

Latest financial report says revenues are up over expenses.

After finding itself $8 million in the hole, the city’s water department will have climbed halfway out by the end of June, according to a recent financial report.

The City Council will review a report Tuesday that says, overall, revenues are up slightly better than budgeted, and that the city’s troubled water department is making progress.

In April 2011, the city discovered its water department was running seriously in the red, to the tune of $8.2 million. An audit late last year tried to answer why  and determined it was mostly caused by water rates not keeping up with expenses.

Now, the city is estimated that the deficit will be sliced to $3.9 million by the end of June 2013.

“Overall, water enterprise operations continue to project operating revenues exceeding expenses by $2.7 million,” states a report to City Council.

In other areas, the economy shows small signs of improvement, and revenues for the first quarter are $161,597 better than anticipated, the report states. That will easily provide for the $80,359 in extra spending the city has done.

The city’s financial health is reflection of the overall economy. The recent report shows that retail sales locally are up 18.2 percent over the year prior for the period ending June 30, 2012 and hotel taxes are up 30 percent. Property valuations show a slight increase at .5 percent, according to the report.

The City Council will meet 6 p.m. Tuesday at City Hall, 32400 Paseo Adelanto in San Juan Capistrano.

Jim Reardon November 13, 2012 at 04:27 AM
The headline on this article obscures what is actually being reported to the City Council this week. In the quarterly budget update, the City maintains its "contingency reserve" just above the Council mandated minimum by transferring $900,000 from Capital Reserves. Of course, no actual transfer occurs, since this is just an operating budget. The "transfer" simply distorts the budget to make the situation look better than it actually is (or may be). Frankly, this whole arrangement is so jumbled that it is doubtful that anyone can make sense of it. Still, the report also mentions that the production goal for the GWRP is being cut, presumably because goals in the first two quarters were not met. It claims credit for savings in the electricity budgets item due to reduced production, but fails to suggest that other costs (e.g., labor) may need to be adjusted accordingly. Instead, the proposal is to reduce the production target and keep all the budget cost that the city can actually control. Then at the end of the year, when the budget is "balanced", we'll be talking about next year with less money in the bank. Back to the headline, is the deficit to be $3.9 million this year, or is the suggestion that we are going to make money (thus reducing the accumulated deficit from prior years)? Please clear this up. If City Water operations are producing a surplus, as implied, it is time to reduce these outrageous water rates.


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