OSCODA – The Huron Shore Regional Utility Authority (HSRUA) has released its 2020 preliminary budget, which proposes increases for all five of the municipalities which receive treated water from HSRUA.
The document was discussed at the Nov. 11 Oscoda Township Board of Trustees meeting, where Superintendent Dave Schaeffer said the HSRUA Board of Directors have endorsed the budget for recommendation to member municipalities.
Assuming there is concurring approval from these entities, the authority will take up consideration of the final budget adoption at their next meeting in December, Schaeffer advised.
The draft HSRUA budget shows total operating revenue of $1,169,105 for 2020, and total operating expenditures amounting to $1,369,105. A transfer from fund balance to account for the $200,000 operating income loss will put the net income at $0.
The five municipalities serviced by HSRUA are noted below, along with the 2019 figures for the operating income they provided, and the proposed amount they will contribute to the 2020 budget:
• East Tawas: $137,414 in 2019, $156,306 proposed in 2020, for an increase of $18,892.
• Tawas City: $149,194 in 2019, $182,498 proposed in 2020, resulting in a $33,304 jump.
• Baldwin Township: $29,917 this year, $41,778 proposed in the coming year, for a difference of $11,861.
• AuSable Township: $115,049 in 2019, $125,148 sought in 2020, for an increase of $10,099.
• Oscoda Township: $411,226 this year, $494,375 proposed in 2020, resulting in an $83,149 hike.
Interest, rents and charges for services rendered are expected to make up the remainder of the 2020 HSRUA operating revenue. The appropriations anticipated are for contracted services, $781,000; capital improvements, $496,700; legal fees, $36,000; repairs and maintenance, $27,705; insurance, $21,500; audit costs, $6,000; and miscellaneous expenses, $200.
For Oscoda Township, in particular, Schaeffer said the hike in 2020 is a 20.2 percent increase from the 2019 budgeted amount.
He said the township board should note that the 2020 budget revenues are based on trailing year water consumption calculations, which are used to allocate applicable percentages to each municipality.
Schaeffer also provided the board with HSRUA’s recently adopted capital improvement plan (CIP) and maintenance expenditure schedules.
“What happens if we don’t approve it?” asked Treasurer Jaimie McGuire.
Schaeffer said he would have to go back to HSRUA with a proposal.
“So it’s negotiable, or it’s not negotiable?” questioned McGuire.
Schaeffer said he guesses that he would have to get something to the HSRUA Board in advance of their December meeting, outlining what the township wants done differently.
He pointed out that, to reduce the increases to the municipalities last year, the budget called for taking $380,000 from the HSRUA fund reserve.
“And this year, again, they’re dipping into the fund reserve balances, to the tune of $200,000. So that, then, would take them down to about six months worth of fund operating,” Schaeffer continued, adding that this is as low as HSRUA wants to go.
“Do the other municipalities that are involved in HSRUA get the same type of increase?” McGuire then asked.
“Yes. It’s all based on the water consumption. So ours is the largest, because we are the largest user of HSRUA,” answered Schaeffer.
“So, because we’re the largest user, wouldn’t we have some type of leverage, or not really? Just a question,” McGuire said.
“No. Their authority could still go through with that budget,” noted Supervisor Aaron Weed.
“The rates are derived from their operating costs. And they have a lot of capital improvements that need to be made. So it would be a matter of going through their budget and determining what Oscoda felt was not necessary in their capital improvements,” he explained.
“Based on what I’ve seen in their CIP plan, they’ve already done some moving around of their capital improvements to try and ease these increases,” Weed added.
“I think HSRUA is simply doing the same thing that we need to do with the future of our systems,” Trustee William Palmer elaborated.
He said Oscoda Township hasn’t raised its water or sewer rates enough in the past to maintain the level of improvements that need to be made to these systems.
“We haven’t raised water rates here in years. And, at some point, we have infrastructure that needs to be repaired and replaced. We need to have the money for them to do that,” Palmer went on.
He said he’s not happy about the increase for Oscoda but, if the township wants to keep the level of service HSRUA is providing, officials need to allow the budget and the CIP that is being projected to maintain the system.
Schaeffer then pointed out the charge for services allocation that is also included with the proposed budget. Outlined as follows are the per thousand gallons used, and the percentage for each community.
East Tawas, 67,273 per thousand gallons used, for 15.63 percent of the overall total; Tawas City, 78,546, 18.25 percent; Baldwin Township, 17,981, 4.18 percent; AuSable Township, 53,863, 12.51 percent; and Oscoda Township, 212,776, 49.43 percent.
“So that percentage of that increase is reflected on usage, per thousand gallons used,” said Schaeffer.
He also noted, given that this is a trailing year, that the figures are based on 2018 usage since HSRUA doesn’t have all of the 2019 usage data.
Schaeffer said Oscoda’s water usage is by far the greatest out of the other municipalities, with the next largest being Tawas City.
He pointed out that, even when combining the totals for Tawas City and East Tawas, it’s still not as much of a usage level as in Oscoda. “So their increases are going to be smaller because we use the most, at 49.43 percent.”
Clerk John Nordeen said a lot of HSRUA’s increases are obviously tied to the cost of the water Oscoda is buying, but also to the capital improvements. Therefore, if there are any questions about whether the township is getting its money’s worth, he thinks this centers around the CIP and ensuring that HSRUA is making capital improvements to the portions of the system which impact Oscoda.
As long as the trustees and their representative on the HSRUA Board feel they are getting that fair share of the maintenance going on in capital improvements, Nordeen said he is fine with that. “But, to me, that seems to be where the conversation would center around – are we getting an equitable share for the money we’re putting in.”
Schaeffer augmented this, saying that HSRUA’s 2019 budget called for $560,600 in capital improvements; the vast majority of which had to do with the maintenance that was just performed on the Lakewood Shores water tower.
“So that’s a million-gallon tower out there and, obviously painting and maintaining one of those things, that took the largest chunk of that $560,000 budget for 2019,” Schaeffer said.
“And when you look at the budget for 2020, that’s the only thing that goes down, because they’re still putting almost $500,000 into capital improvement, but it’s less because they don’t have a water tower project in 2020,” he explained.
“And that directly affects our residents, the project they did in Lakewood Shores,” McGuire noted.
The 2020 capital improvement budget proposed by HSRUA is $496,700, with some of the intended projects including roof replacements, upgraded pump and chemical controls, painting of the water treatment plant building, air compressor replacements, replacement of obsolete master meters, improvements to the Tawas water tower and more.
Oscoda officials voted 5-0 to approve the draft 2020 HSRUA budget as presented. Trustees Jim Baier and Martin Gayeski were not in attendance.