The $5.7 million in “new revenue” that is helping reduce this year’s City of Manteca general fund deficit actually isn’t new money.

It represents support charges that general fund functions such as city administration, finance, IT, human resources and custodial services do for non-general fund accounts. That is primarily enterprise accounts such as solid waste, wastewater, and water services.

The theory is to make the general fund departments “whole” for services they provide for enterprise funds.

Given those accounts haven’t been paying the $5.7 million annually it will add even more pressure to raise rates for the water and wastewater accounts that have been bleeding significant red ink.

 The water fund alone — based on the last information the city provided the public — was projected to end the fiscal year this past June 30 with a $16.2 million deficit.

The sewer fund was expected to be $4.7 million in the hole and the solid waste enterprise account getting dangerously close to zero.

What it means is whatever rate increases are proposed they will now have to cover the $5.7 million annual support charges, pay back the $20.9 million with interest to restricted accounts such as road project fees collected on growth, cover maintenance and operation costs, and set aside funds for replacement of lines and facilities due to aging.

The $16.2 million deficit that has to be paid back as it is money owed to other accounts — it was borrowed to pay for water projects and operations — in its self is staggering.

If the city had 30,000 water users to spread that across, it would come to $540 per customer. That doesn’t factor in interest owed.

The need to get a rate increase in place to help stop the bleed is prompted the council in April to hire HyrdroScience Engineers for close to $1 million to:

*do an interim water rate study.

*do a final water rate study.

*develop a citywide water masterplan.

*develop a website and use social media to keep the public updated.

When all is said and done the city expects they could spend close to $2.7 million on required rates and studies without paying for daily operations or paying back money. The remainder of money is needed to prepare environmental, grant, and preliminary engineering documents. Any remaining budget not spent will be returned to the appropriate fund at the conclusion of the project.

Water rates haven’t increased in Manteca since 2008. 

The game plan is for an interim rate hike to be brought back to the council to address maintenance and operations as well as paying back the $16.2 million.

Meanwhile a thorough study of city needs will outlined in a water master plan being developed will involve expensive capital improvement projects such as well and pipeline replacement.

That will lead to a final rate hike that will be wedded to the interim rate hike.

 “Essentially we robbed Peter to pay Paul and we need to pay Paul back,” Cantu said of the $16.2 million back in April.

For all practical purposes Peter and Paul are one in the same given ratepayers are also taxpayers.

The practice of inter-fund borrowing started long before the current council. It also appears staff that has long since departed municipal employment never made previous councils aware of what they were doing.
Staff has indicated that the bulk of the money was borrowed from growth fees to fund road projects that growth created the need for.

That may help explain why the city now has a funding shortfall for the McKinley Avenue interchange as well as how promised projects such as traffic signals at Woodward Avenue and Main Street were budgeted and then dropped over the years.

To contact Dennis Wyatt, email dwyatt@mantecabulletin.com