By Staff
Mayor, manager remain at odds over cost study
By EUGENE L. TINKLEPAUGH
Staff Writer
BELHAVEN — The Town Council of this harbor community in northeastern Beaufort County was faced with two simple but not pleasant solutions Tuesday — paying for a new cost-allocation study.
Belhaven gets money for its general fund from tax revenues. It gets money for two major enterprise funds from user fees. Because there are indirect services the general fund — day-to-day town operations — provides to the town’s enterprise funds, a method for allocating those costs as reimbursements has been used in the town’s budgeting practices.
Mayor Adam O’Neal, well into the second year of his first term, maintains the cost-allocation study Belhaven officials used was inaccurate and that the enterprise funds were being charged too much for the indirect services they receive.
A new study conducted by Swartz, a Virginia-based engineering firm, shows that the water-and-sewer fund isn’t being charged enough for those services.
At the council’s budget workshop Tuesday, Town Manager Tim Johnson said the council could either raise water and sewer rates by 30 percent to make up the cost differential or the council could temporarily close the gap by nixing its previous plans to reduce the sewer system’s inflow-and-infiltration amounts. Inflow and infiltration are ways water from outside sources enter the sewer system. That additional water, some of which enters the system after rainfalls, adds costs to treating the town’s wastewater. Minimizing inflow and infiltration should reduce treatment costs.
The council directed Johnson not to raise rates.
Swartz did find the town’s electric fund is being charged too much for the services provided by the general fund. Applied to the upcoming fiscal year’s budget, that will result in $31,629 less coming out of the electric fund’s rainy-day fund to balance the $3,384,229 budget.
Johnson’s original proposed budget for fiscal year 2007-2008 — prepared before the new study — called for taking $181,148 from the general fund’s reserves to balance the electric fund. Based on the new study, that amount should fall to $149,519.
The electric fund is the town’s largest enterprise fund. The water-and-sewer fund is budgeted to spend $1,895,060 in 2007-2008. The new study states the water-and-sewer fund should have been charged $131,096 more than Johnson’s proposed spending plan recommends.
Instead of charging the town manager with the task of raising rates to meet the increase, Mayor Pro Tempore George Ebron Jr. endorsed Johnson’s second strategy of eliminating the sewer repairs to make up the difference.
O’Neal disputed the engineering firm’s study, saying it would not be accepted by the Local Government Commission, which approves budgets and audits for all government bodies in the state.
In a letter dated May 11, 2007, the LGC’s director of fiscal management, Sharon Edmundson, said a new cost-allocation study must be conducted in order for Belhaven’s budget to be approved. O’Neal has said he took his concerns to the LGC in an effort to get user fees lowered.
Reading from a prepared statement Tuesday, O’Neal said that because the study is not based on “hard data” the LGC wouldn’t accept it.
Councilman Al Baker said the mayor should “stop being so paranoid.”
To counter O’Neal’s contentions, Johnson read the draft statement of Swartz’s indirect cost-allocation study.
The statement refers to O’Neal’s “hard data” requirement as “the most perfect accounting.”
Johnson noted that such measures wouldn’t be cost-effective.
The town manager called O’Neal’s efforts “nothing more than a dog-and-pony show.” At one point, Johnson said the mayor is “narcissistic.”
At the council’s June budget meeting, the engineering firm that conducted the study will present its information and findings to the council.
The council could approve the town’s budget at its next meeting.