Washington Court House City Manager Joe Denen made a presentation of the city’s 2019 financial summary to city council this week.
The presentation was prepared by both Denen and Tom Riley, the city’s director of finance.
Denen shared several graphs Wednesday to help show various financial numbers over the past several years. He focused on three major funds — the general, the water and the wastewater.
According to these graphs and Denen, the city total income has been increasing since 2017. Just as income has increased, so have total expenses.
The total income for the general fund in 2019 was $9,308,893 while the total expenses were $9,773,913.
Essentially, the main expense to the general fund is personnel. One of the reasons for the increase in expenses, according to Denen, is due to the hiring of more fire and police employees.
He further explained that another reason behind the increased expenses is the beginning of the Wastewater Treatment Plant (WWTP) improvement project. The WWTP project, as previously reported, is being completed following several discussions with the Environmental Protection Agency (EPA).
“In 2019, the general fund made a loan to the water fund (for the WWTP project). We record that as an expense of the general fund,” said Denen.
This loan was $500,000 and will be paid back to the general fund over the next few years, according to Denen. A third reason for the expenses being higher than income is due to a one-time expense of purchasing land in the industrial park for approximately $200,000.
Pertaining to the industrial park Denen said, “all spending is spending but there (council) took dollars, (council) converted them to an asset and in this case, that is a marketable asset.”
The end balance of the general fund is $1,198,474, which was lower than in previous years.
Essentially, Denen reiterated that although the expenses were greater than income, and the end balance took a dip, this was due to that loan money having been moved and it would be corrected as the money is paid back.
Although the water fund income increased in 2019, Denen explained that is once more related to the WWTP loan as money was added to the fund.
Personnel expenses in the water fund have slightly increased from previous years. Although personnel costs have increased, the cost to upkeep and maintain water systems is a greater expense for the water fund.
“Expenses aren’t personnel-driven. It’s pipe, it’s concrete, it’s stuff,” said Denen. “Now when you do that, you can financially improve the balance sheet dramatically in a relatively short period of time. You can’t do it for very long because in reality the only thing that you are doing is delaying work in the real world. The pipe that you would have replaced doesn’t magically fix itself.”
While the end balance of the water fund has been decreasing in recent years, it was up higher in 2019 than in 2018.
“Water’s financial position over the next several years will improve… oh, tremendously, because (council has) paid off that debt that required the water system originally. So that’s why we had no concern about the water fund’s ability to repay it’s loan to the general fund and to be financially healthy for some time to come,” said Denen.
The Wastewater fund has had an increase in both income and expenses. The current expenses are only what has been incurred to date and do not include the engineer’s estimate for the cost of the WWTP project.
Wastewater has higher expenses in “equipment” and “stuff” than in personnel. The end balance is lower than in recent years, according to the graphs.
A pie chart shows that the general obligation debt is at $1,755,897 while all other debt is at $11,070,425.
The general obligation debt, according to Denen, is “the debt to which the full, faith, credit and taxing power of the city of Washington Court House is pledged to repay. It’s the closest thing to signing in blood that whatever happens that we shall pay this back.”
The other debt is “typically associated with water or wastewater where it’s the activities of those funds, and those funds only, that are pledged to repay that debt,” according to Denen.
He explained that the ratio of that debt is “good.”
“So what does this all mean? The city is financially stable,” said Denen.
In other news from the council meeting, Denen requested approval to paint the Kenskill water tower the same shade of light blue as the Easton tower. He also requested approval to do sewer grouting. Both requests were approved by the council.
A resolution was placed on second reading that, if passed, would allow Denen or his designee to enter into an agreement with EMH&T Engineerings for engineering services.
Reach Jennifer Woods at 740-313-0355 or on Twitter @JennMWoods.