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Auditor warns of $2.7M water-fund shortfall; council to study possible sewer-rate increase
Summary
At a finance committee meeting, Auditor Anita Harper reported the Water Pollution Control fund is roughly $2.6'.7 million over-appropriated and the general fund faces tighter reserves; council members asked the utilities director for a 10-year forecast and scheduled a utilities committee follow-up to consider rate changes and other options.
Auditor Anita Harper told the Lorain City Council's finance committee that the city begins 2026 with limited unencumbered general-fund resources — about $3,053,210 available to appropriate — and that the Water Pollution Control (WPC) fund is over-appropriated by roughly $2,700,000.
Harper said the city's certified beginning unencumbered balance across all funds is $46,313,006.63 and that the general-fund reserve is set at 5% (about $2,088,000). "So what we ended up with in the general fund is $3,053,210 available resources to appropriate from for 2026," Harper said. She added that some grant funds show negative cash when the city pays upfront and awaits reimbursement.
Council members pressed for detail on the WPC shortfall and what drove the gap. A council member asked why the utility ran $2.6'.7 million higher than expected; Harper pointed to rising operating costs and the way some funds have been drawn down. Council members and staff discussed the city's historical fixed sewer charge, which was reduced to $9 per month in 2020 from higher levels. One participant noted that earlier plans would have raised the fixed charge to about $32'3 by 2026 had the prior schedule remained in effect.
A city speaker explained a potential short-term fix would be a modest increase of approximately $2 to $3 per month in the fixed sewer charge; several council members said they would not support moving forward without a detailed utilities-department forecast. "We need to figure out a real game plan," one council member said, urging the utility director to provide a 10-year forecast to the committee.
Harper also outlined revenue assumptions: about 65% of general-fund revenue comes from income taxes, and the auditor proposed a conservative 1.8% increase in the income-tax estimate for 2026, setting the income-tax estimate at $27,800,000. She said reductions in county homestead/owner-occupied credits would modestly affect the city (about $252,000 across funds, with $141,000 to the general fund).
Next steps: the chair agreed to schedule a utilities committee meeting to review the WPC accounting, the utility director's 10-year forecast and options for closing the gap (rate increases, expense reductions, or other revenue strategies). Council members also requested a list of projects paid from the WPC fund since 2020 to better understand past spending decisions.
