Council given two options on water, sewerage rates

The Vandalia City Council will have at least two options to consider on water and sewerage rates for the coming year.
Those two options – increases of 15.18 or 3.11 percent for water and 6.05 or no increase for sewerage – were presented as Dale Timmermann and Tricia Elam of Timmermann and Co. Ltd. presented the annual city audit report on Tuesday.
If the council takes no action at its Sept. 19 meeting, the water rate will increase by 15.18 percent and the sewerage rate by 6.05 percent.
That’s because of an ordinance that the council passed more than a decade ago that states that rates for the coming years would be determined by the production expenses of the previous year and any increases would automatically go into effect unless the council voted to take other action.
A second option, Timmermann explained, would be to back out of the production expenses the effect of the $276,000 unfunded Illinois Municipal Retirement Fund liability adjustment established by an accounting change by the Government Accounting Standards Board.
Dropping out $214,458 in the water system total and $62,262 in the sewerage system total that were added as a result of the accounting change reduces the production costs from $2,407,006 to $1,832,548 for water and from $1,042,485 to $980 for sewerage, Timmermann said.
If the council chooses that second option, water rates would go up by 3.11 percent and sewerage rates would stay the same in the coming year.
That second option, Timmermann said, “would adequately cover your expenses for operating the water and sewer departments.”
Alderman Andy Lester asked whether the council has the option of not implementing any increases.
It does, Timmermann said, but Alderman Jerry Swarm advised against that.
The city, Swarm said, is “dealing with an outdated water plant,” and deciding not to increase rates based on increased production costs can cause problems down the road.
“You’ll get yourself in trouble if you don’t” have rates reflect production costs, Swarm said, remembering that the council approved the ordinance on automatic rate adjustments after the city put off rate increases for a number of years. The result was a significant increases in rates.
Timmermann agreed with Swarm.
“Catching criticism over a small annual increase is better to deal with most of the time than letting it go and needing to have a bigger increase,” Timmermann said.
In presenting the audit, Timmermann said that the city’s main fund, the general fund, “is in a good position at this time.”
He said that revenues exceeded expenses by $515,000, and that the city did a good job of estimating its revenues.
For example, for the city’s biggest source of revenue, state sales tax, Executive Assistant LaTisha Paslay estimated revenue to total $1,900,000 and the revenue figure ended up being $1,899,317.
Timmermann noted that the city is getting “a fair amount of revenue” from gaming. Gaming revenues increased to $150,000 last year, $30,000 more than the previous year.
“Overall, expenses are a good deal lower than they were a year ago,” Timmermann said.
Later in the meeting, Mayor Rick Gottman praised the city employees for their efforts in that area. “Without them, we wouldn’t have been able to hold expenses down,” he said.
Timmerman told aldermen that there was deficit spending in the city’s two Tax Increment Financing funds, explaining that the nature of the TIF program is that “you will have deficits once in a while. It’s nothing to be concerned about.”
One reason for a deficit is the money spent on the demolition of the buildings at the northwest corner of Fifth and Gallatin streets, he pointed out.
Even with those deficits, he said, the city still has significant money in those funds.
Asked by Gottman to compare the city’s financial situation with other communities, Timmermann said, “The city is in pretty stable financial condition.
“A few years ago, you all made some tough decisions, and not all governmental entities in the area or in the state have been willing to make hard decisions when they needed to.
“You put yourself in a position where you were not jeopardizing your financial strength,” Timmermann said.
“Compared to many other cities around here, I would say Vandalia is in better shape than most other cities in the area,” he said.
Also at Tuesday’s meeting:
• The council set Saturday, Oct. 29, two days before Halloween, as the city’s trick-or-treat night. It will be allowed from 6-8 p.m. that evening.
• The council heard the first reading of a request from The Cork to change its liquor license from a Class A classification to a Class H classification.
A Class A license allows the retail sale of beer, ale, stout and lager beer, and a Class H license allows the retail sale of beer, ale, stout and lager beer, and wine.
The council will vote at its Sept. 19 meeting on adding a Class H license and dropping the number of Class A licenses by one.
• Kyle and Sheba Barker requested the installment of No Semi Parking signs along Gochenour Street just east of Eighth Street. Kyle Barker said that semis parked in that area would block the visibility of their new drive-up coffee shop.
The council will vote at its Sept. 19 on an ordinance amendment calling for such signs on both sides of Gochenour in that area.
• The council authorized the hiring of a mechanic at the city garage, and Alderman Russ Stunkel, chairman of the council’s personnel committee, announced that Kyle Reiss had been hired for that position.
• The council voted to update the city’s municipal code. Municode, based in Tallahassee, Fla., gave the city an estimate of $2,390 for the work.
• The council approved a resolution that asks the Illinois Department of Transportation to allow the closure of Gallatin Street from Third Street to Seventh Street from 6:30-9:30 p.m. on Thursday, Oct. 27, for the Vandalia Lions Club’s Halloween Parade.
• The council approved the payment of $3,810.80 to Sidener Environmental Services of St. Louis for the repair of an altitude valve on the Fillmore Street water tower. Swarm explained that the valve keeps the water towers on Fillmore and Thrill Hill in balance.
• The council observed a moment of silence for former city employee Marvin “Tiny” Nichols.
• Aldermen received a letter from City Clerk Peggy Bowen that verifies that B&L LLC, of which Lester is a partner, is no longer receiving revenue from gaming devices at Sunset 66.
Lester said that he wanted this information out because at a meeting last month, Jason Paslay of PMK Inc., which wants to add gaming at Sunset Plaza, repeatedly said that state records show that Lester is still receiving revenue from those machines.
Lester said that Wortman Holdings LLC now holds the truck stop video gaming license and is getting that revenue. The state is behind in processing that change, Lester said.