I recently requested both Councilor Campbell and the City Manager to include an Agenda item to allow the opportunity for citizens to ask questions and offer testimony on the adoption of an Accurate Representation of Service Costs Policy for the Water Operating Fund. Both Councilor Campbell and the City Manager declined the request.
At the Manzanita Council meeting when the indirect cost methodology was adopted in 2023, no citizens offered testimony in favor, four citizens asked questions that went unanswered and the Council without a single comment or discussion passed the motion on a four to one vote. The City could not answer simple questions when it adopted this methodology and has no interest in allowing any further opportunity for citizens to question the false and contradictory explanations that have resulted since its adoption.
In Manzanita, once Water Operating Fund indirect costs are calculated and transferred to the General Fund and becomes General Fund revenue, the City spends it on whatever it wants including things that have no connection to the water utility. Councilor Campbell confirmed to me that this is indeed true and that the City has been doing this for years. The purchase of new street signage was offered as a specific example of how Water Operating Fund revenue designated as reimbursement costs for City Hall staff is being spent. Perhaps citizens would like the opportunity to ask the Council for clarification on how the purchase of street signage is in any way connected with the operation of our water system and hear their explanation.
In an email from Councilor Hart, he assured me that these transferred indirect cost revenues were reimbursements to City Hall staff for administrative support and as such it was not possible for them to again be spent on anything else. Since these two explanations directly contradict each other, perhaps these Councilors should get together with an explanation that they can both agree on.
When I asked Councilor Campbell about the false statement made by the City Manager that “about 50% of all city invoices originate with the water utility”, he declined to give an explanation. This should be of interest to both Councilors and citizens.This claim is meant to convince us that processing invoices for Water Operating Fund materials and services is much more complex and time consuming than similar payment requests made to other City Fund or departments and thus requires greater staff reimbursement costs and subsequent transfers to the General Fund.
Three years ago the City abandoned the FCS overhead methodology because it had trouble explaining it. It would appear that the City is again having difficulty providing consistent common sense explanations of just how the current methodology actually works.
I asked Councilor Campbell if he would ask some specific questions of City staff so that we both might better understand how these staff reimbursements actually work. No, he was not interested in doing this. He did claim that what the City is now doing “clearly was the practice that you employed” as City Manager. This is completely false. I never budgeted any indirect cost charges to the Water Operating Fund nor did I transfer any water funds back to the General Fund where they disappear and now force the City to offer nonsensical and conflicting explanations as to how they are spent. A review of City Budgets during this time period will confirm this fact.
It’s unfortunate that our Council is reluctant to provide citizens the opportunity to ask their questions and receive answers on this matter. It’s equally concerning that one Councilor prefers making false accusations about the use of Water Funds during my tenure as City Manager rather than asking staff relevant questions to better understand how hundreds of thousands of dollars of water revenue is being spent on things that have nothing to do with the operation of our water utility.
Randy Kugler
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