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City auditor warns sewer fund is depleting water reserves; recommends raising sewer rates
Summary
An auditor told the Deerwood City Council the sewer fund has run negative repeatedly and has nearly exhausted available water fund support; the auditor recommended raising sewer rates in line with the sewer district to avoid tapping reserves.
Acting Mayor Millsop and the Deerwood City Council heard an audit presentation on April 6 that flagged ongoing shortfalls in the city sewer fund.
Eric Smedsrud of CliftonLarsonAllen told the council the audit was “good,” but said the sewer fund has been going negative year after year and has been sustained by transfers from the water fund. He warned that, at the current rate, the sewer fund has almost depleted the water fund and will be drawing on reserves next year. Smedsrud recommended the city raise sewer rates by the same percentage increases used by the sewer district.
Council members did not vote on a specific rate change at the meeting. The audit presentation noted the pattern of transfers between utility funds and framed a rate adjustment as the fiscally prudent next step to restore fund balance and avoid eroding reserves.
