Smithfield council approves $19,700 sewer-rate study; staff say fund balance healthy but historical deficits persist

The Smithfield Town Council authorized a contract, through the Interlocal Purchasing System, for a sewer rate study not to exceed $19,700, to be funded by the sewer department operating budget.

Town Engineer Josh Veil told the council the sewer enterprise has operated at a deficit for several years and the flat monthly fee of $4.50 may warrant reevaluation. “The town's sewer enterprise fund has been operating with a budgetary deficit for the past several years,” Veil said, adding that the current fiscal-year appearance of a surplus reflected capital expenditures that had not yet been used.

Veil said the consultant will compare Smithfield with three similarly sized municipalities and present alternative rate structures, including usage-based options, and will evaluate capital-improvement needs as part of the analysis. He told the council the study vendor estimated a roughly five-month timeline for completion.

Councilors asked about the sewer fund balance. Veil and other staff offered differing figures during discussion: one staff reference to last year's audit put the fund balance near $12.8 million; another speaker noted a fund-balance figure closer to $4.5 million for portions of the sewer enterprise. Veil told the council that capital and operating balances are tracked in the enterprise fund and that, if the enterprise runs deficits, those would be covered from the fund balance.

The motion passed by voice vote. Council staff said follow-up will include execution of the contract and delivery of the consultant's report with rate alternatives and capital forecasts.

Ending: The town expects the consultant's report to return to council with recommendations on new rate structures and capital planning within the five-month timeframe Veil described.