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Blackduck staff warns water fund shortfall, proposes 2025 volume-rate increase
Summary
City staff told the council the water department’s fund balance is falling because of recent debt and coding corrections and recommended raising water volume rates in 2025; officials said they will present finalized per-gallon increases and public notice at the November meeting.
City staff told the Blackduck City Council that the city’s water department has a declining fund balance and likely will not meet depreciation and debt obligations without a modest increase in water volume rates.
The staff presentation noted two accounting issues inflated recent expense lines: a lease for a Marco printer was reallocated and payroll allocations for the deputy clerk had not been shifted fully into the DMV/utility department. "October actually looks like what it should be," the staff member said, adding that the correction produced a one-time spike in administrative expenses rather than a drop in sales.
Beyond the coding correction, staff said increased debt from a recently built facility combined with current cash flows will leave the water fund thin. Unaccounted-for water — the difference between pumped volume and billed volume — has fallen from roughly 8% to about 4%, but staff said revenue remains below projections for covering long-term depreciation and the outstanding debt on the water tower and treatment facility.
"We’re going to have to increase that because we’re not making enough yet," the staff member said, and indicated the council would likely see a proposed volume-rate increase in 2025. Staff gave an initial, working figure during discussion and said they would narrow the per-gallon adjustment and present final fees and charges at the November meeting; any billing change would appear on February statements for January usage after public notice.
Councilors and staff discussed operational steps to reduce lost water, including better metering of city-owned buildings and tracking fire-department training usage, measures staff said would lower the unaccounted-for percentage over time. Public works staff (Mike) confirmed forthcoming maintenance and meter improvements that could support those efforts.
The council did not adopt a final rate tonight; staff recommended a gradual phase-in and committed to returning with precise numbers, a public-notice plan and the formal fee adoption schedule.
