Electric, water, and sewer utility systems each saw a loss of profits in the city’s fiscal budget running through June of last year.
Water is now operating at a $100,000 loss where it was making over $100,000 in profits the year before. Meanwhile, sewer department revenue expenses jumped from $624,000 to $914,000 while revenue declined from $563,000 in 2020 to $540,000 in 2021.
As you can see more significant than the loss of revenue was the city’s half-million-dollar increase in expenses.
“You cannot sustain this guys. Something is going to have to be done,” urged auditor Burton Kolder, of the Kolder, Slaven, and Company accounting firm. “Every department had a reduction in revenues. Expenses on the other hand went from $4.9M to $5.4M. A lot of this or half of this is your salaries.”
In some departments filling empty positions doubled payroll. Sewer payroll went from $136,000 to $216,000. Inflation did not help, but some increased costs are not as clear. Telephone expenses tripled from $13,000 to $43,000. Something Mayor Pro-Temp Craig Prosper can’t accept.
“Here we are. We’re trying to get some things done. Apparently, the budget is not being followed, and I’m going to tell you right now, I’m not going to vote to amend this budget until we get these answers on this. We need to get some answers on this,” Prosper stated.
Accountant Burton Kolder told officials of the 40 municipalities his firm audits, St. Martinville has some of the cheapest rates, so in addition to modernizing their billing records and investigating the value of replacing meters, additional rate hikes are recommended.
St. Martinville did raise electric and water rates in September which will affect next year’s audit. Even with those changes, further increases to keep the systems from losing money are likely. So don’t be surprised if you live in St. Martinville and see a proposal to increase to your water or electric bill soon.
Officials said the amount of money the city is losing on utilities cannot be made up by cutting costs alone. Still District 1 Councilman Mike Fuselier warned raising rates won’t be easy.
“Every time certain members of the council try to make an effort to do that, we’ve got kicking and screaming up here that we can’t go up a nickel on anybody. Well, you know what? We aren’t going to exist as a city,” Fuselier said.
Available reserves for the city are also a big concern. Only $400K equals 13 days of expenses. Compare that to the 30 days the city had available in 2018 and the target of 60 days which is an ideal cushion and precaution for any major storms.
The audit also had 14 different findings.
12 were repeats from previous years:
- Inadequate segregation of functions is a common problem that should be monitored but no corrective action is needed.
- Inadequate controls over reconciling accounts were corrected.
- Inadequate controls over utility fees are being addressed through the city setting up digital accounts and spreadsheets to ensure disconnects and fees are properly tracked.
- Inadequate controls over customer utility deposits were corrected.
- Inadequate controls over inventory were corrected through the city building a locked gate for equipment as a way to keep items from being lost.
- Inadequate controls over capital assets are not corrected yet, but new tech will allow all inventory to be tracked.
- Inadequate controls over bank accounts were corrected with bank reconciliation monthly tracking.
- Inadequate controls over the collection of fines were corrected by a clerk making copies of checks and verifying by account.
- Inadequate controls over timesheets were found because the city did not require employees to sign their timesheets. It was corrected now because timesheets are signed by employees and their supervisor.
- Ticket Fine Fees Payable were corrected by having check numbers recorded each month.
- Compliance with bond covenants was found because the city did not maintain the required amount of cash in the reserve fund. It was corrected through the collection of sales taxes which funds were transferred immediately.
- Inadequate controls over utility fees were corrected through tech now set up to track each month for processing.
Two findings were new:
- Controls over traffic tickets. There were no procedures in place to comply with Louisiana statutes. It is corrected by being checked by Mayor’s court clerk and having books locked up.
- Compliance with recreation bond fund. The city improperly used capital outlay funds for the general fund. They cannot be used outside what they are required for. It was corrected with a money transfer, but should not have happened.
17 verbal comments not serious enough to be put in the report. Kolder told the council, “Some of which are minor. Some of which could get in the report if not corrected.” He also stated he would not be surprised if the legislative auditor contacts them because he knows the city’s current operations are not sustainable.