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“Cooking the Books”

October 19, 2011

EID’s General Manager has a big problem. Even with a 28% residential Water rate increase, he won’t be able to make debt coverage ratios for the Water Enterprise Fund.
(One year deferrals in raising Domestic Irrigation rates to residential rates and in fully raising Recreation Turf rates, along with a $1.2+million shortfall in planned Property Tax revenues, altogether will require rate increases well above 28%).

To offset these shortfalls and to artificially mitigate the 28% rate increase, here is what EID’s General Manager currently is considering:

  1. Refinance at least $10 million of debt repayments due in 2012 and 2013 to 2022 or beyond to:
    a) create an unauthorized “stealth” increase in EID debt, and
    b) create $10 million of bogus “cost savings” in 2012-2013 that would reduce his now public plans for a 28% residential water rate increase in 2012.

  2. Divert Property Tax revenues from the Sewer Enterprise Fund to the Water Enterprise Fund… effectively stealing Sewer customer monies.

Instead of accounting shenanigans, here is what a fiscally responsible EID General Manager should be doing:

  1. Slash the $87 million 2012-2016 Capital budget with special attention to $45 million of Hydro/FERC projects and $9 million of brand new IT projects.

  2. Slash 2012 operating costs at least $2.5 million (i.e., 6%) with reductions in the 20 person Engineering staff, 11 person IT staff, 5 person HR staff, and 3 person PR staff. 

  3. Immediately rescind the $6,000 management car allowances and ten days Management leave in lieu of paid Overtime.

  4. Reduce the 170 vehicles for 115 field people.

To reduce the 11% rate increase for 2013, more heavy lifting in reducing spending must come from employee benefits.  Essential action items include: renegotiating per employee $18,500 medical plans, $12,500 per employee pension contributions, and 7-10 weeks per employee annual paid time off.

Unless true cost cutting occurs, the only other way EID can avoid a more than 28% 2012 residential Water rate increase is through “cooking the books”.