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La Cygne council imposes temporary water surcharge as utility cash flow drops
Summary
Facing multiyear declines in water‑sales revenue and shrinking utility reserves, La Cygne’s City Council adopted a temporary $2.35 per 1,000‑gallon surcharge to stabilize the water fund while a study committee examines longer‑term rate, borrowing, and budgeting options.
La Cygne city leaders voted unanimously on Oct. 19 to add an interim surcharge to residential and commercial water bills after staff reported the water fund’s cash balance had fallen sharply over recent years.
City Clerk Gary Mahon told the council that net cash for the water fund had fallen from $641,000 to about $310,211 and that the decline was driven primarily by reduced water sales to outside customers and steady operating costs. Attorney Mike Shultz presented documents the city had commissioned evaluating the utility’s finances and possible options. The council then adopted Ordinance No. 1404, imposing a temporary surcharge of $2.35 per 1,000 gallons while a Water Finance Study Committee develops recommendations for long‑term action.
"The report shows our cash reserves are being drawn down and we need an immediate, temporary measure to keep operations solvent," Mahon said as the ordinance was introduced. The study committee was appointed at the Aug. 24 meeting and includes Council President Travis Robbins, City Clerk Gary Mahon and attorney Mike Shultz. The committee has been asked to report back with concrete options — including rate restructuring, refinancing, short‑term borrowing or drawing from available reserves — by Sept. 21 (committee deadline set at appointment) or sooner if the mayor extends the schedule.
Council and staff emphasized the surcharge is a stopgap. Mahon and Shultz outlined alternatives that will be analyzed: (1) short‑term borrowing or temporary notes, (2) transfers from other city funds if legally permissible, (3) refinancing existing water debt, and (4) pursuing state revolving fund loans. The council also authorized the committee to examine the regulatory and billing steps required to implement permanent rate changes once a final plan is chosen.
Next steps: the committee will analyze financial modeling scenarios and return with recommended rate changes, revenue options and projected customer impacts before any permanent rate ordinance is prepared.
