Above: The Dumas City Commission received its monthly financial report Monday, which shows an increase in the gas and water funds due to the recent increase of the utilities’ base rates. Still, each is several hundreds of thousands of dollars from breaking even. (File Photo)

Editor’s Note: The city’s financial situation has been in peril for a number of years, but Commissioners Justin Willis and Ben Maples didn’t begin serving until May.

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In the first month since the Dumas City Commission raised the utility rates, the gas and water funds have improved but must still generate a considerable amount of revenue to break even.

Finance Director Dottie Crockett went over the October financials with the commissioners Monday, and the documents show the gas fund must improve by $492,292 to break even, and the water fund must improve by $391,699. In the month since the base rate increase, the gas billing total for October showed an improvement of $39,376.62, a 51 percent improvement from October, 2014. The water billing total improved 33 percent, going from $195,098 in October, 2014 to $259,426.03 in October, 2015.

The city has for many years relied on water and gas consumption to generate income for the general fund, but records show water consumption has decreased for several years during a severe drought when conservation was encouraged, and it continued to drop during this year’s wet summer. Crockett provides the commissioners with a monthly financial report, which for the past five years has shown utilities were not generating enough money to maintain a healthy general fund. Commissioner Steve Bodnar periodically told the other commissioners during discussions, such as the building of a civic center, that the city’s financial position wasn’t stable, but it didn’t get the other commissioners’ attention until they  understood the city couldn’t make a $1.9 million debt service payment due Sept. 1. The city’s financial advisors told them that during wet summers and warm winters, the city’s revenues would shrink. The perfect financial storm occurred during this wet summer, and the city had to secure a $1.5 million loan from Happy State Bank to make the debt service payment, and they raised property taxes and gas and water utility rates to generate revenue to avert further financial problems.

The city’s financial report shows one bright figure — the city’s cash position has increased because of the utility base rate increase. In October, 2014, the city’s cash balance in unrestricted funds was a negative $901,932. Unrestricted funds are those the city can use without the limitations the state or the commission has placed on them, which are restricted funds. The hotel/motel fund, one of the restricted funds, is at $497,132 as of October 31. Because the city’s cash on hand doesn’t meet the costs to operate, it must borrow from the restricted funds to operate. The financials show the city’s cash on hand is $810,812. With the addition of a $112,978 certificate of deposit, the balance is $923,790. However, unrestricted funds are currently at $1,096,816, leaving the city’s unrestricted funds in the negative $173,026. The monthly financials given to the commissioners lay out that information, but they didn’t act until late summer to reverse the city’s declining financial position.

The city slashed its budget for fiscal 2015/2016 to right its financial ship, including not giving its employees a cost of living adjustment. Still, the city must put money into some departments that don’t generate enough revenue to cover their expenditures. In the last 10 years, the golf course had $2,600,594 in revenue, but its expenditures during that time totaled $4,026,505, a difference of $1,425,911.

The financial report also shows a difference of $223,126 as of October, 2015 between operating revenues and operating expenditures. Revenues for the 2015/2016 fiscal, which began October 1 are at $246,139 and expenditures are at $469,265.That’s why the city is borrowing money from restricted funds to meet its monthly expenditures. The city must increase its revenues to break even and grow its revenues which advisors say should be at the minimum of about three times the expenditures, an amount of $1,407,795.

Andrew Friedman, managing director for San Antonio-based SAMCO Capital Markets Inc. is one of the city’s financial advisors. He said it will take about five years for the city to get the fund balances to where they will cover the three month’s of operating expenses

After Crockett discussed the financial report, she asked the commissioners if they had any questions. No one indicated he did.