Manteca’s preliminary budget foreshadows what is to come — significant rate increases for water, sewer and solid waste services.
The spending plan for the fiscal year starting July 1 shows a general fund — the money that covers day-to-day schools services such as police, fire, streets and park upkeep, and general government — in good shape.
The $67.8 million projected general fund budget features a modest $10,997 surplus. Given it does not rely on transfers and anticipates expenditures expected during the fiscal year to be covered by revenue generated during the same period, it is a balanced budget.
That means there is no need to transfer money from reserves to cover operating costs.
That’s the good news.
The bad news is that enterprise accounts — basically those services such as water, wastewater, and solid waste collection funded by ratepayer charges — show the city could run a deficit as high as $14.5 million.
There are already three rate studies that have been wrapped up or are in the preliminary process of being adopted.
The most egregious issues are with water and wastewater rates that haven’t been increased in more than 12 years.
The water operations and maintenance fund is expected to generate $13.1 million.
That is against $19.9 million in expenses.
Even if the city continued to postpone critical work on aging pipelines in older sections of Manteca, that would only reduce needed expenditures by $1.1 million.
There is $18.7 million in hard costs between personal, operations — everything from routine maintenance materials, chemicals to treat water, electricity to run well pumps, needed media replacement to remove arsenic from ground water to surface water purchases from South San Joaquín Irrigation District — and debt service.
That means the city is collecting only two thirds of the $18.7 million needed to cover ongoing cists.
The sewer operations and maintenance fund is expected to generate $17.9 million
While that covers the day-to hard costs that come to $17.8 million in the form of personnel and operations, it doesn’t cover the $1.6 million debt service.
Nor is any of the identified $13.1 million of work needed to address current pipe issues — many of which are more than half a century old — that are in poor to bad condition able to be paid for with funds generated from the current rates..
In the past, such work has been addressed when breaks happen creating public health concerns.
The subsequent work to re-line or replace pipes ends up costing more than if it was done on a non-emergency basis.
Solid waste that had a rate adjustment five years ago, is expected to generate $15.6 million in revenue against $16.3 million in hard expenses.
There is $556,948 in capital expenses the city can’t delay.
There is no debt service.
The council on June 20 when they meet are expected to establish an August hearing date for any protests for the proposed solid waste hikes to keep the fund whole and to pay for changes in recycling services created by a need to meet a pending state mandate regarding reducing what is being landfilled.
The previous council when Ben Cantu was mayor, unearthed internal bookkeeping and management issues that had clouded getting a clear picture of the enterprise funds, but especially water and sewer.
While there was no financial malfeasance per se, unorthodox bookkeeping made it impossible to get a clear picture of what was going on.
Audits have are almost all current and bookkeeping issues have been addressed.
The fact the city went more than a decade without looking at the enterprise accounts and raising rates and did interfund borrowing in order to do so that has to be paid back, reflects the high operating deficits outlined in the preliminary budget now that the municipal general ledger is following account procedures that have been established as best practices for cities.
The City Council is conducting a budget workshop during special meeting on Wednesday, June 14, at noon at the Civic Center, 1001, W. Center St.
To contact Dennis Wyatt, email dwyatt@mantecabulletin.com
