Wednesday, July 11, 2012

Bicknell Looks to Utilities to Close Deficit Due to Failure to Properly Adopt Budget

From the Vincennes Sun Commercial:

It’s a good news day for Bicknell, according to Dan Hedden.

Hedden, of Indianapolis-based accounting firm Umbaugh and Associates, was at Monday night’s meeting to present the council with options for dealing with the city’s financial deficit created by the failure to properly adopt last year’s budget.

One option he presented was requiring payments in lieu of taxes by not-for-profit entities such as the wastewater and water utilities.

Hedden said if it were a private entity, the wastewater utility would pay a little over $56,000 per year in taxes and the water utility about $58,000 in taxes annually.
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Another option was a salary-sharing plan with to the mayor, the clerk-treasurer, the deputy clerk-treasurer and the city council receiving some of their pay from the water and the wastewater utilities.

Hedden said the wastewater treatment facility generally brings in around $858,000 per year, while the costs for operation are around $658,000 per year. The remaining $200,000 is up for discussion.

Likewise, the water utility annually brings in about $620,000 while the costs for running the facility are about $500,300. About $56,000 of that operating cost will be saved this year due to a few unfilled positions. The rest is generally used as a capital budget for the utility the city can use to pay the salaries of the mayor, clerk treasurer, deputy clerk treasurer and the city council, saving money in the general fund.

In his presentation, Hedden presented the council with a model for both alternatives and said doing adopting them and taking the maximum tax draw allowed next year, the city should be able to recover while leaving the utilities enough money to spend on replacement and improvement based on what the two utilities have spent annually in the past.

Hedden said both alternatives did not include rate increases.

“The bottom line is that its a good news day,” he said. “There is a trade off, the allowance for replacements and improvements goes down, but the way we look at it, the allowance would be similar or greater than what the utilities have historically spent.”


The council agreed to adopt the payments in lieu of taxes option.
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http://suncommercial.com/articles/2012/07/09/news/local_news/doc4ffb8e9cd1c3f099965685.txt