Editor's note: Mr. Rennick has written an open letter to Mayor Peter Chirico.
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Mayor Chirico:
These are a few items noticed after a quick review of the 2024 water budget.
The claimed increase in the budget of 5% is being calculated as an increase over last year's budget. The real increase compared to last year's actual expenses is 11%. The *’d note in the budget summary indicates that the 2023 actuals are subject to accruals. One needs to question why accruals would be required in a budget that is prepared on a cash basis. Budget preparation without 2023 actual figures is meaningless for future years’ budget preparation and comparison purposes.
1. The increase in wage costs is listed as $56,734. Actual compensation costs in 2022 and 2023 were $4.9 million and 2024 is an increase of over 27% or $1.4 million. Once again, we see the futility of trying to approve a budget using only budget figures for comparison. This level of compensation requested in 2024 for 63 employees amounts to a $100,000 average per employee. Maybe someone could request a more in-depth accounting of how this level of compensation is warranted and how it compares with the real world beyond the blanket of municipal employment.
2. Note that the increase in capital funding is noted as $875,898 in the preamble but is actually $1,280,971 according to the figure in the budget.
3. The phased-in CPI adjustment is $376,290. This blanket inflation-based increase in the capital fund using the CPI as the measure is faulty since the CPI is a consumer price index and the water department is not a consumer and the water budget contains virtually no items included in the calculation of the CPI. It is also faulty because this policy is forcing current taxpayers to fund benefits that will benefit, and should be paid for by future taxpayers.
4. A 2% increase in the Capital funding amount is arbitrary and should be based on current requirements, not future requirements based on arbitrary estimates.
5. The Vehicle and Equipment usage increase of $123,389 is a 15% increase in what is an internal charge from the city fleet department. To effectively examine an increase of this magnitude, council needs to discuss how this figure is calculated as well as the 2024 fleet department budget. The fleet department budget has included charges for future capital purchases for several years. This is contrary to municipal practice which strives to match taxes paid to those taxpayers who are benefitting from the services being provided.
6. Administration & Overhead, which is an internal charge by the city, amounts to almost $2 million this year with an increase of 5.49% over 2023. This line item has increased an average of almost 10% per year during the last 9 years, a discussion of this charge would seem to be in order.
7. Reserves were used in 2023 to lower the budget. This is not a sound financial policy. Over the years, the city administration has recommended, and various councils have approved, transfers of every operating surplus into reserves in pursuit of a reserve level based on an arbitrary percentage of expenses for the stated purpose of guarding against unforeseen or one-time financial difficulties. However, the practice has been to use these reserves to reduce increases in water bills as a result of increased budget requests from city administration. This continued use of reserves for other than their intended purpose being a cushion against unforeseen or one-time financial difficulties is simply disguising the real increases in budget requests from the city administration.
8. According to city reports the 2023 estimated water department surplus is $530,000 and should be included in 2024 revenue. The 2022 $850,000 arbitrary transfer from reserves should be cancelled and the remaining $450,000 of the $1.3 million justified against the stated reasons for reserves. Budget increases should be compared with 2023 actual figures and staff should be tasked to re-do the budget with a target of a .5% increase from last year's actual amounts.
9. Any council member who mistakenly believes that cutting the water budget by one penny leaves them open to being personally liable for any problems that may arise with the water system should recuse themselves from the debate. This type of fear-mongering is without basis in fact.
10. No one is claiming this is an easy process but continuing to approve staff-recommended budgets as presented without any real questioning or pushback is compounding the problem and getting us nowhere.
Donald Rennick CPA, CA
North Bay,
