Port Arthur’s finance director told the City Council on May 20 that the city’s general fund revenues are tracking above expectations through the second quarter, but that water and sewer utility operations have required emergency spending that reduced reserve balances.

Finance Director Linda Biles presented the semiannual report and said general-fund revenue and many major funds are “trending very well.” But she also said the city has moved cash to cover urgent utility repairs and currently expects to owe the general fund roughly $6 million because of emergency water‑system and sewer repairs undertaken in the current fiscal cycle.

“These were addressed as emergencies because they affect the health and safety of our citizens,” the city manager told council, summarizing staff work to secure funds and noting the city has drawn on reserves while grant reimbursements are pending. Biles said the city also has approximately $21 million in federal and state grant drawdowns that are in-process and not yet reimbursed.

Councilmembers pressed to know what the fiscal impact will be. Councilman William Frank noted the long-term implications: lowering reserve levels can affect credit ratings and future bond costs. Biles confirmed she has discussed that risk with the city’s financial adviser and said excessive use of reserves could impair the city’s rating if it becomes a trend.

Council members and staff discussed next steps: pursue state and federal grant funding aggressively, clarify fund balances and cash balances in the next quarterly audit, and provide more granular tracking of capital-project restricted funds. Biles said the 2024 audit is scheduled to be completed in June; she also committed to presenting the completed audit and clarified cash-vs-fund-balance distinctions in future reports.

Ending — takeaway: City leaders said they will continue to pursue external funding and refine reporting to keep reserves transparent. The finance director warned that continued reliance on general-fund balance to finance utility emergencies is unsustainable and that long-term capital and grant strategies are a priority.