Water Rates and Budget.

From Councilwoman Lisa Hicks-Clayton whatever answers you were looking for leadershipvacum I’m sure you will find it here. Thank you Councilwoman for getting this information to us.

Water Rates and 2015 Water Bud-1

Water Budget Audit 2014-2015

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2 thoughts on “Water Rates and Budget.”

  1. grandmasuzanne610 says: April 13, 2015 at 9:27 pm, You are amaising with your analysis. The following are additional budgetary number for you:

    From page 2 of the 2015 water fund budget:
    1- Total expences are not 16,260,981.00 they are 13,839,102.00 because the depreciation amout of 2,421879.00 are invisible not true expendetures, they in fact reserve or access revenue, in the business for profit accounting it use for tax deduction, the city don’t pay taxes, so what is the deal? Any way PM showed the correct number when calculating the 90 days everage exp. at the end of page 2.

    2- Total operating revenue are 16,229,481.00

    3- Total non-operating revenue from property taxes are 2,802,684.00

    4- Total revenue are 19,032,165.00

    5- Total proposed researve by end of 2015 FY on 6/30/15 suppose to be 19,032,165.00
    19,032,165.00 – 13,839,102.00 = 5,193,063.00

    From page 1 of the 2015 water fund budget:

    1- Calculating the true cash researve for the water fund should include all researve fund collected using the fund name.

    2- There is 6,801,157.00 listed as reserve for “COS” Is that a seperate fund activities? It look like the water fund reserve is only 4,302,110.00 but the reality is the water fund cash researve is 11,103,267.00 as of 7/17/2014 adjusted to conceliation of fund end of FY books closure, as reported by PM. The numbers are reported correctely in different accounting format for readers who looks at bottom lines figuers. And by the way all this accounting methods are acceptable, and give the same answers if you know what you are looking for. The city can create another cash researve line for waterlines replacement for 10,302,110.00 and the bottome line of the water fund researve will show a severe deficit of 6,000,000.00, is that is ok accounting, YES its, and PM has nothing to do with that because its a policy issue not violation of any rules. The fact will be the same the water fund cash researve is 11,103,267.00

    3- The 11,103,267.00 plus the proposed 5,193,063.00 exess cash revenue from 2015 proposed fund budget = 16, 296,330.00 by the end of FY 2015 on 6/30/2015. Again very healthy fund. And don’t matter how its reported, in accounting all numbers are accounted for by the end of the journals entries.

    I hope with my little knowledge I was able to present a basic accounting format after I read the posted document by the councilwoman. I hope I’m correct but I don’t claim that I’m and very open for any correction by who ever disacree with the results.

    Do we need more reserve cash in the water fund? that depend on how much we need for the CSO project? Do we know how much that project cost? And when that project started? Did the council approve it? And when? In the mean time the cash is used for inner-funding loans.

    Thank you councilwomen for releasing the document, now I understand why you don’t want to answer the 4 questions. I hope you understand the numbers better after you read the above and vote on this subject accordingly.

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  2. The water budget and audit are all fine and dandy if you can translate all the legal and technical gobbledygook; it is purposely written this way to confuse and frustrate the average person. However, I was taught how to take a problem and break it down to its least common denominator to better understand it. This is what I have done below.

    Detroit charges Dearborn Heights $7.70 per 1,000 cubic feet of water.
    (From the Detroit Water 2014-2015 Wholesale Water Rates Chart)

    Dearborn Heights charges its residents $3.76 per 100 cubic feet of water/ 1 unit. (this is from my current water bill)

    There are 10 units (100 cubic feet) in 1,000 cubic feet.

    Dearborn Heights pays $0.77 per each 100 cubic feet of water from Detroit.

    Subtract $0.77 from $3.76 and you get $2.99 – the amount Dearborn Heights profits on 100 cubic feet or 1 unit of water it sells to its residents.

    However, we need to figure in an amount over and above the actual cost of water to cover things like maintenance, repair, liability and bonds. Let’s say that our city needs 100% of the cost of water to meet these obligations.

    Add $0.74 cost of water and $0.74 (100% markup for repair, maintenance, liability and bonds) and what you get is $1.54; which is what a Dearborn Heights resident should be paying for 100 cubic feet of water with a 100% cost factor figured in.

    However, currently we are being charged at a rate of over 490% markup to cover these costs and this doesn’t include what we are paying extra for our sewage.

    The city is charged $6.52 to process and treat 1,000 cubic feet of sewage (per Mr. Dan Brooks of Wade Trim) or $.65 per 100 cubic feet of sewage and the city charges us $4.98 for 100 cubic feet of sewage.

    The article below tells the whole story as to why our water bills are so high. Forget the gobbledygook and legalize -below is the bottom line stated in paragraph three and four.

    Water rates rising 7% in Heights
    December 22, 2013Posted in: Stories
    By BOB OLIVER
    Times-Herald Newspapers

    HEIGHTS – The cost of water is going up after a proposal to raise water taxes by 7 percent was approved 5-2 by the City Council during its Dec. 10 meeting, the last of 2013.

    The vote came after the council heard from Plante Moran Partner Martin Olejnik, who audits the city’s finances, who stated that the hike is due to a variety of reasons, including increases in rates from Wayne County and the Detroit Water and Sewerage Department.

    The city’s water department budget, which is separate from the city’s general fund, had a $5.6 million fund balance at the beginning of the fiscal year on July 1, but that is expected to drop to $3.3 million by June 30 due to money being pulled from the account for other expenses so the city can keep its finances balanced.

    City Comptroller Vince Macari said the decline in the fund balance is a concern because the city has frequently borrowed from the water fund over the last few years to balance the books, though the money is always put back into the fund with interest.

    The total revenues and expenses for the 2013-14 fiscal year are budgeted for roughly $23.5 million, which is $2.5 million less than last year. Obejnik said the increase was projected to be even higher initially.
    “Last year, we would have anticipated an 8 percent increase every single year for a five-year period in order to get to a target cash balance, but because of some changes only a 7 percent increase is now expected,” Obejnik said. Obejnik said two changes that allowed the city to shave off the 1 percent in additional tax were $200,000 saved in concrete work and lower than expected fringe benefits for the year.

    Councilman Thomas Berry, who along with outgoing Councilwoman Janet Badalow voted against the budget, asked Obejnik why Detroit and Wayne County raised the cost of water, which in turn affected the rates in Dearborn Heights. “I would like to know where the city of Detroit has experienced its increases to pass it along to us, because we’ve had no changes in our infrastructure,” Berry said. “What has increased for them that prompted them to increase the water rates to our city?”

    The hike will increase the average residential water bill in the city by about $14 every two months, or approximately $84 a year, and will begin in the next couple weeks. (Bob Oliver can be reached at boliver@bewickpublications.com.)

    If the budget is truly balanced there would be no need to keep such a large amount of money in the water balance to pay off parts of the budget that come up short.

    No taxation without representation; however, the mayor and council are using the water fund because we as citizens cannot vote on it. So they can raise it as high as they want in order to pay for other things in the budget by calling it a “loan”. One other thing, it is illegal to use a water fund for anything other than the delivery of water. PERIOD. So why does Plante and Moran okay it – because numbers can be spun anyway you want them to add up when you start using technical and legal terms and our city leaders have the spin down pat.

    The mayor and council have us residents by the throat because unlike cable providers we can’t shop around for a better price from another water provider. Other cities I have studied don’t even come close to charging their residents for water that Dearborn Heights does.

    So when the mayor and council wants this or that but can’t account for it in the budget, they raise the water rates because they can and we the residents can’t do a darn thing about it.

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