Story by Susan Meeker
WILLIAMS, CA (MPG) – The Williams City Council last week decided to revise its two-year preliminary budget and dip into reserves to absorb a shortfall in the sewer fund, which was created by the rising cost of doing business.
City leaders said they would rather offset a deficit rather than ask voters at this time to approve a rate hike through a Proposition 218 ballot election.
Officials said the city has repeatedly failed to get voters to support tax increases of any kind, including Measure B, in 2022, even though they said a large position of the tax burden would be borne by Interstate 5 travelers who stop in Williams for fuel and gasoline.
The current shortfall in the sewer fund is tied to residential and commercial sewer rates not keeping up with inflation and the cost of operating the wastewater treatment plant. Residents currently pay approximately $88 a month for sewer, plus $2.65 for every 100 cubic feet of water over 500, up from about $84 in 2019, but rate increases are based on the Consumer Price Index or 2% – whichever is lower.
City officials said, when they approved the preliminary budget in July, that it took only two years of high inflation to get the sewer fund into trouble. From May 2021 to May 2022, the Consumer Price Index rose 8.6%, and rose 4% from May 2022 to May 2023.
Williams Finance Director Rex Greenbaun said the city can overcome the $167,910 shortfall in the 2023-24 budget, and a $202,874 shortfall in the 2024-25 budget by adjusting employee allocations where possible to be covered by the General Fund and Utility Enterprise Fund, following an analysis of actual services performed by Public Works and administrative employees.
“With that allocation move, it shifts a lot of the burden from the sewer fund to the water fund,” Greenbaun said.
The changes resulted in the City Council approving a combined general fund and water fund deficit of about $325,000, which will be covered by the city’s reserves.
City officials said the shift in allocations will not change the amount of money the city spends over the next two years.
“The cost to run the city stays the same,” Greenbaun said.
Williams has about $4.8 million in reserves and has seldom had to dip into it to balance the budget; however, city officials said they do not plan to bail out the sewer fund indefinitely.
“This has alleviated the immediate need to have a 218 to increase sewer rates, which is good for the citizens,” said City Administrator Frank Kennedy. “But we don’t know what the future will hold. At some point, we will have to raise those rates, depending on what our needs are.”
While Kennedy said the city, overall, is healthy, they would continue to watch spending over the next the two years as revenue and expenses become more certain.
Rather than review the budget at mid-term, Kennedy said he and Greenbaun would update the City Council quarterly.
“This budget is tight,” Kennedy said. “We are in good shape but if something happens with the economy, or something happens that we have no control over, then we need to be able to manage those changes as they come. The best way to do that is to have accurate reporting to the City Council to help manage those changes.”
While the rate hike has been temporarily averted, Williams officials said only more development and an eventual rate increase of 7 to 8% would help the sewer fund sustain itself.