North Ogden Utility Costs Leave Residents Paying More
North Ogden City’s budget is being called into question as two candidates battle for the mayoral position. During a debate last week, candidate Neal Berube questioned the amount of money being transfered from the City’s Enterprise Fund to the General Fund for the current fiscal year.
His opponent, Lynn Satterthwaite, explained that those funds, nearly $880,000, are administrative dollars being reimbursed to the General Fund. Last year the administrative transfer was $477,000 showing a nearly 87 percent increase in this year’s end-of-year transfer.
A portion of that increase is due to five employees no longer being paid from the Enterprise Fund, but the General Fund, according to North Ogden City Finance Director, Evan Nelson.
Enterprise funds are made up of fees charged to the community to cover city-owned services; these types of funds are self-supporting. Those funds are broken into sub-categories as in the case with North Ogden— sewer, water, storm drain, solid waste. Nelson explained those five employees get General Fund dollars, and then depending on how much time those workers focused on Enterprise issues, that amount is put back in the General Fund.
“Over the past few years we’ve analyzed those transfers and tried to add more details. We’ve tried to show whether it’s justified.” He goes on to explain this new process of payment saves the Enterprise Fund money by monitoring which enterprise these employees are actually working under. Salaries for 13 other employees explain the remainder of the six-figure transfer.
At the center of the debate is a utility program—Repair and Replace. Satterthwaite credits himself with the creation of this program, which charges utility users more than is required in an effort to build a nest egg to pay for possible future failures of city assets such as pipes, meters or drains. Satterthwaite began the program while on the City Council, “We found out we were saving nothing to repair, replace or maintain those items. So when it’s discussed, we’re transferring money into (the) General Fund, that money is for the operation of the City where administration represents utility funds.”
Berube questions the practice, “We will have to replace assets over time, but that comes with discipline on how to spend money.”
Nelson says Satterthwaite attempted to calculate what things will cost down the road instead of basing it on historical figures, “There’s not a crystal ball, assumptions are built into the model. We try to set aside X-number of dollars to repair and replace.” Currently, more than $3 million sits in the Enterprise Fund after the administrative transfer, mostly accrued from the Repair and Replace program.
“I find that the (City) Council and the department heads felt much, much more comfortable and confident in the work that they were doing when we addressed being able to fund the expenditures of Repair and Replace,” says Satterthwaite.
“The citizens of this community have been charged $1.5 million as an increase in their utility bills.,”
contends Berube, "If the City would not transfer money out of the water, sewer, (and) garbage funds into the General Fund to use for non-enterprise things, we would have adequate money to support water, sewer, and garbage funds.”
Repair and Replace is noted in the last four years’ fiscal budgets as an explanation for a yearly rate
increase reflected in users’ monthly bill. Since the program went into operation, users are paying an
extra $11 per bill. This does not include the three-dollar transportation utility fee charged each month. Berube, a CPA by trade, calculated that increase to 35 percent.
Enterprise monies, according to state law, can only be spent on capital projects relating to the
Enterprise Fund. Examples include the new water reservoir priced at just over $1.4 million, or the 400 East water line, estimated at $390,000, although depreciation is calculated into the cost of those
structures. State auditors monitor whether these rules are being followed. “State auditors care that
water money is spent on water projects,” explained Evans.
For a city to use overages in an Enterprise Fund, according to House Bill 164 codified the law, they are required to notify every utility user of the intention to use the money for something other than an enterprise capital project. City leaders are also required to hold a public hearing on the money transfer, which is called a “gift”.
Berube isn’t the only critic of Repair and Replace, according to the Utah Tax Payer Association website, they believe a policy which overcharges users is government attempting to hide the true cost of services. They go on to question such plans as a way for leaders to avoid a property tax increase.
North Ogden City Manager, Jon Call, says in the end, the City Council actually decides if there will be a Repair and Replace rate hike based on meetings with Public Works. On whether or not there’s already enough money held over in the Enterprise Fund, he says, "The Council is preparing for the worst disaster they can think of and having enough money to cover that.”