Local Government Commission: Mount Olive sewer still a concern
By Steve Herring
Published in News on June 1, 2016 1:46 PM
MOUNT OLIVE -- The Local Government Commission has told the town that while the condition of its water/sewer operation continues to improve that some concerns remain.
In a letter to the town, Sharon Edmundson, director of the fiscal management section for the state treasurer's office wrote, "The overall financial condition of the water and sewer operations continues to improve, but we still note signs of financial weakness indicating that the water and sewer system may not be financially sustainable in the long term unless circumstances change."
She wrote that losses in the system indicate that the amounts being charged to customers are not sufficient to cover the costs of providing water and sewer services.
Town officials say that the town's draft budget will continue to address those concerns.
The budget proposal includes a a built-in 2.5 percent increase in water and sewer rates in July and again in January. The rates have increased in both of those months since the standing increase was first approved by the town board in 2008.
The commission has indicated the two annual increases would address those concerns.
Even with the increases, the town still has one of the lowest water rates in the state and the sewer rates are at or below the statewide median, Town Manager Charles Brown said.
It is possible that the July rate increase might be the last one needed, he said.
"You will note in the (letter's) second paragraph that cash flow from operations (water and sewer bills) while positive is not sufficient to provide the necessary cash flow to cover the systems debt service payment," Brown said. "Further they state that rates, rate structures and collection procedures should be re-evaluated and adjusted as needed to provide coverage for at least system operating costs and debt service payment.
"In other words they are directing the board and me to adjust water and sewer rates as needed to make the system self sustaining. The board has no choice when directed by the state treasurer's office. The Local Government Commission is going to come down on our heads if we don't cover that operating expense and debt service for the water and sewer fund."
Copies of the $6,889,426 budget draft are available for public review at the town clerk and town manager's offices during business hours 8 a.m. to 5 p.m. Monday through Friday.
People can ask questions about the budget as well.