Redkey talks finances (6/3/05)

REDKEY — Town finances will need to be monitored much more closely, and water and sewer rate increases are a definite possibility in the near future, council members here learned Thursday evening.

Town attorney John Brooke said Thursday that clerk-treasurer Brenda Adkins will be providing departmental budget reports monthly to all council members as well as at least one for public inspection, starting next month.

Council member Dottie Quakenbush said this will be a big help to her. Also council president Violet Erlenbush recommended that all council members come to the council sessions earlier so they can spend more time scrutinizing bill payment claims.

Brooke said that in light of the low balances in the water and sewer funds, he will give serious consideration to recommending rate hikes for those departments. Adkins explained that the sewer fund account balance is dropped to $100 each month as funds are transferred to make outstanding sewer bond payments.

Several years ago the sewer bond funds were refinanced, Erlenbush said, making overall interest payments lower but also shortening the overall bond payment period. In the long run this represented a good deal for the town, but in the short run, “it’s killing us,” the council president said. Practically all the income from sewer bills goes to pay bonds, Adkins said.

Thursday’s special 4 p.m. council session attracted nearly 50 local residents and lasted more than two hours. The main focus of the session was the town’s financial status and why a $20,000 bank loan was needed last month to cover payroll expenses.

At the request of town council members, Redkey town attorney John Brooke had prepared a set of questions for Redkey clerk-treasurer Brenda Adkins who was asked to respond to them as well as several follow-up questions at Thursday’s meeting.

At the conclusion of the meeting, Brooke said he was satisfied with the information which Adkins provided, even though she told him that more time, on her part, would be required to answer some of the questions — specifically how many and which property owners were delinquent in their water and sewer bills.

Brooke said that given the figures which Adkins had supplied, he would now start “crunching some numbers” and considering some possible changes and solutions.

Also after the meeting, Adkins said she was “glad to have had the meeting.” Adkins said that now she hoped some of the rumors about town finances would be squelched.

Adkins summarized that budgeting and cash flow were at the heart of the current problems. She admitted at the meeting that over the last five years, some of the budget estimates for a variety of items including gasoline and natural gas purchases had just been carried over from one year to the next, while in reality prices had risen dramatically.

Brooke said that he thought the meeting was productive, and he praised the town council on being so open with the financial information even though it was far from positive.

In answer to the first formal question for Adkins asking about current cash balances in several accounts, she responded with a handwritten sheet showing a general fund balance of minus $24,750. However, she noted that the town’s next scheduled state tax draw in June was expected to total $107,000. The town receives two tax draws a year for a total amount of approximately $153,000, Adkins explained. After June, the next one won’t arrive until December.

However, Jay County auditor Freda Corwin said this morning the state had just released its tax draw figures for Jay County for June. She said according to those state figures, Redkey will be receiving a check for $86,375.70 on about June 20.

Cash balances in other Redkey accounts, as reported by Adkins Thursday night, are $5,317 for the parks department, $2,431 for the water department, $14,158 for a building maintenance and improvement fund and $100 in the wastewater treatment service fund.

Adkins said she felt these amounts were sufficient until the tax draw arrived, although they created cash flow problems.

Also requested from Adkins by Brooke was a report showing the town budget with actual expenditures through the first five months of the year. Brooke received this and said he would take it back to his office for further study. This report was also handwritten, and upon initial review showed that some budgeted amounts did not appear to be sufficient to hold out for the entire year — with more than half the budget estimates already being spent in the first five months of the year.

“You’re OK for the temporary time, but I don’t know if you can make it through the end of the year,” Brooke told the Redkey council members and Adkins.

The next question by the attorney called for “a list of all persons who are delinquent on either their water or sewer bill, as well as a balance due for each of these persons.”

Adkins responded that she would need more time to make up such a list, noting the town’s lack of computer equipment. She agreed to send this list to Brooke as soon as it was available, and the attorney agreed that this was all right with him. He also agreed the computer capabilities of the clerk-treasurer’s office are very limited, according to modern standards.

Council members noted that computer equipment is expensive, but several audience members pointed out that in the long run more accurate record-keeping might save the town some money. Also Brooke said that perhaps there were some grants available that could help fund the purchase of computer equipment for the town.

Responding to another question from the attorney, Adkins was able to provide Brooke with copies of the town’s current water and sewer rate ordinances. The water rate ordinance dates back to 1999, and the sewer rate ordinance has not been changed since 1988, Adkins said.

Town council president Violet Erlenbush pointed out that in 120 days Redkey needs to come up with money for expenses related to its proposed agreement with the Indiana Department of Environmental Management to upgrade its sewer system and eliminate combined sewage overflow problems. Referring to the current amount in the town’s sewer account provided by Adkins, Erlenbush said, “This will not be $100 but in the thousands of dollars.”

Brooke said he had been in contact with IDEM officials about the proposed agreement and added, “I’ve got to crunch some numbers to help (the Redkey town officials) out.”

As the meeting continued, audience members began asking questions of town council members, Adkins and Brooke.

At some points Thursday evening’s session resembled a New England town meeting with audience members joining in the discussion to offer opinions and suggestions. These included:

•Redkey resident Charlie Noble who pointed out that in a recent article in The Commercial Review there seemed to be some confusion over whether town council members were receiving monthly financial reports as specified in a 2003 State Board of Accounts Audit which was unfavorable towards Redkey.

Brooke and Adkins said town council members will soon begin receiving those reports at their monthly meetings. Council member Dottie Quakenbush said that she thought this would be very helpful. Erlenbush said that previous reports of this type had been issued, but the format needed to be improved so they were more understandable. Brooke said this would be the case with the new reports.

Quakenbush added, “It’s very necessary that each department have a breakdown on its budget.” Quakenbush, the council member in charge of the parks department, said, “I think it’s necessary to have a report every month.”

•Redkey resident Joe Anderson complained about not taking the low bid on January ice storm clean-up work in light of all these financial problems. Brooke said the contract was awarded based on qualifications and Federal Emergency Management Agency specifications.

Also Adkins noted that the town received a partial payment check from FEMA this week so that Young Builders of Redkey could receive a portion of the money from its bill for the work. Council members voted unanimously in favor of making a partial payment of $42,225 to Young Builders. His total bill was $48,400.

•Also in response to another question, Adkins and council members agreed that money had already been allocated for this month’s scheduled Fun for Kids carnival in Redkey. That festival is not in jeopardy, Adkins said.[[In-content Ad]]