Water and sewer funds face timing-driven shortfalls; council told arsenic remediation is funded while rates and meter rollout will be reviewed

The Newport City Council heard Aug. 4 that the city’s water and sewer enterprise funds are showing early-year shortfalls driven by timing, construction draws and scheduled debt payments related to recent water-quality and infrastructure work. Consultant Chip Stearns said the June–July snapshot showed the water fund with construction-related draws and a large near-term debt payment tied to arsenic-remediation work. He explained that the city had borrowed to address the naturally occurring arsenic issue and that annual payments — for example, a roughly $166,000 obligation mentioned in the meeting — are part of the debt schedule. Stearns said this is “only a timing issue” and that the planned conversion of a short-term line of credit to a long-term bond through the Vermont Bond Bank is intended to smooth payments over decades. Jennifer Hopkins, appearing by Zoom as a Water & Sewer Commission member, told the council the commission expects both water and sewer funds to “fall short of making themselves whole this year” under current rates, though she said the commission would review the numbers and that rates can be adjusted quarterly. She said exact shortfall amounts were not yet calculated. John (Water & Sewer) reported the commission is finalizing language for door-hanger notices and bill inserts to notify customers about the upcoming meter installations; the outreach will include a phone number, an email address and a QR code to give residents multiple ways to respond. The meter-installation rollout is scheduled to begin in the coming weeks, with a notice strategy that includes non-digital options for less tech-savvy customers. Stearns stressed that water and sewer revenue is seasonal and quarterly billing causes revenue timing mismatches with ongoing expenses. He told the council the budget-to-actual comparisons show the water and sewer budgets as entered in the accounting system do not yet align with the spreadsheet-based budgeting previously used, a reconciliation task that staff and the finance task force will pursue. The council and the Water & Sewer Commission said they will evaluate rate adjustments, with any third-quarter rate changes required to be put in place in October to take effect for the November 1 billing cycle. The commission and council signaled that short-term rate increases are a likely tool to eliminate projected fund deficits.