The Finance Department of the City of Altus explained recent budget amendments pertaining to a discovered surplus in Water Treatment Plant Chemical funds and a projected shortage in water revenue.
A surplus in the budget was realized when Gene Leister, Water Plant Supervisor, indicated during the Oct. 15 meeting that he would need at least $300,000 of the budgeted $614,700. Leister was unaware that $342,713 of chemical funds was already encumbered, or spent, City of Altus Financial Department, Senior Accountant Amy Lucas commented this week. Lucas stated an initial estimated savings of $314,700 for water treatment was incorrect.
Councilman Michael Beason had requested a related item be placed on the agenda for the following meeting as suggested by City Manager Elizabeth Gray, for a budget amendment to show a surplus of $314,700.
During the Nov. 5, Council meeting, Lucas explained to the City Council how she included an additional $137,000 ($60,000 for a chemical bid, $17,000 for another chemical bid, both to be considered that night, and a $60,000 cushion to prevent overdrawing on the account) reducing the figure to $135,000. Lucas added, “I’ve taken into consideration everything he [Leister] has bought or encumbered, and these two items.”
Councilman Beason raised a concern about the reduction, stating there were a couple points he needed to make for the record.
“So what I had asked for was a budget amendment in the amount of $310,700 for what we believed at that time was surplus,” he said. “Thereafter this landed on the agenda with you as the initiator and it had been reduced to $212,000.”
Beason then reported that James Wilson, former City of Altus Chief Deputy Administrator and head of Finance, predicted a substantial water revenue shortage as the basis for the lowered budget amendment, during a teleconference following the previous council meeting. Wilson was said to have projected a $1.9 million shortage of water sales not reported in his Financial and Operational update on Oct. 19. According to that update, revenue was 0.6 percent ahead for the 25 percent elapsed FY.
Beason also noted that Wilson mentioned during the teleconference that the Water Chemical Plant had already encumbered, or paid out, an excess of $300,000, when Leister provided his estimation for funds need.
By a vote of 6 to 2, Resolution 2013-46 was approved for a $135,000 amendment to maintain a balanced budget.
Mayor David Webb provided a comment this week on the reduced figure, stating, “There is really not much to it. We knew we could conservatively take some of those dollars out of the budget without making a difference in the budget.”
Wilson addressed the shortage of water revenue during the Nov. 19, City Council meeting. “The response from the community for conserving water definitely far exceeded my expectations,” he said.
While showing that 33.3 percent of the FY had passed, overall utilities revenue was ahead at 35 percent. Wilson recommended, however, a budget amendment so that “budgeted revenues” will match “projected revenues” for all line items. Wilson explained, like water sales, other line items are not performing as well as expected and will create a shortage, yet other areas like Residential Power are doing exceptionally well resulting in a surplus. Projected water revenue projected to be $2,699,135 short, but Residential Power was projected to be $3,705,552 ahead.
On Dec. 5, an item initiated by Lucas was considered to amend the budget as Wilson recommended.
Councilman Beason asked Lucas how Wilson came up with the revenue projections being voted on. Lucas informed that the projections were included in the previous meeting’s financial update, but did not have access to a formula spreadsheet to provide at the time of the meeting.
“These are some significant amendments,” Beason said. “And so I would be curious to see the projections on how he developed them. I think that is reasonable.”
After further discussion, Resolution 2013-53 was approved to amend the budget with a vote of 5 to 3.
A Financial and Operational update for the month ending Nov. 30, will be presented at the next AMA / City Council meeting this Tuesday, Dec. 17 at 6:30 p.m., in Council Chambers of the Municipal Complex.