Club Manzanita Shell Game

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The Budgetary sleight of hand that this Council continues to use to pay for their new City Hall with our Water Fund money is worthy of renewed discussion in light of recent increases in water rates. The City’s explanation the past several years for the need to raise rates was that revenues were not keeping up with expenditures. This begs the question as to how this could be happening.

In FY 2019 – 2020, the Council made a direct transfer of $113,675 from the Water Operating Fund to the City Hall Expansion Fund with no explanation of why this was justified. The following Budget year, the same amount was included again in the Budget to be transferred to the City Hall Expansion Fund. John Kunkel, an experienced City Manager who was serving as our interim at the time and had inherited that year’s Budget, advised the Council that he would not be making that transfer as there was no justification for it. Club Members privately fumed but could not publicly dispute Mr. Kunkel’s decision.
In FY 2020 – 2021, the City cut timber from the Alder Creek watershed and received $500,000 in timber sales. This was the first timber cut since 1995 when all of that initial sale went to construct the blue water reservoir to avoid having to ask citizens for a Bond to finance its construction.

You would think that some portion of this $500,000 sale from watershed property would again find its way into the water construction fund to help pay for the millions of dollars of needed water system improvements. Unfortunately, all $500,000 was put into the City Hall Expansion Fund and has been spent to pay City Hall consultants and the loan to pay for the Underhill property.

In the past four years, $675,000 of your monthly water bill payments have been pulled out of the Water Fund and sent to the General Fund where once transferred can now be used for whatever use the Council wants. This year the Council, needing cash to continue to pay its City Hall consultants and demolition costs, sent $700,000 from the General Fund to the City Hall Expansion Fund.

The City has no internal accounting controls to explain how these Water Fund overhead allocation transfers are spent once they arrive at City Hall. It is not possible to give an exact amount as to how much of your new monthly water bill is now being diverted to build City Hall but there’s no disputing the fact that it is.

For the past two years the City has collected approximately $1 Million dollars each year from water customers that the City Charter says shall only be used for the costs of operation and maintenance of the City water supply system. During this time, not a single dollar of your monthly water charge has been set aside in reserve for future water system improvements.

Not much of a mystery as to why revenues to both operate and make needed water system improvements are not keeping up with expenditures when you shuffle hundreds of thousands of dollars each year out of the Water Fund with unknown amounts then ending up in the City Hall Expansion Fund.

Citizens have to work hard just to follow all the moving pieces in this slick hustle and like any successful shell game, the operator always has the advantage.

This shell game with the Water Fund, while not formally listed with other recently unveiled options, is the most successful revenue diversification program that the City has come up with. Questions that were raised about this deception have gone unanswered and the construction of the most expensive City Hall project in State history for a City of our size moves ahead.

Randy Kugler