By: Diane Benjamin
The City of Bloomington has the following Enterprise Funds:
Water, Solid Waste, Sewer, Coliseum, Stormwater Management, & Golf/Parking.
Enterprise Funds were established to break even – meaning citizens pay for the services they use.
It’s not working out that way.
http://www.cityblm.org/Modules/ShowDocument.aspx?documentid=9336
Page 52:
These numbers are the actual Net Cash reported for last Fiscal Year.
The Water department is charging too much since it has an almost $7,000,000 surplus.
Ditto for Sewer and Stormwater Management.
Add Golf/Parking.
So, if the City set up Enterprise funds so these services would pay for themselves through user fees – the rates need to be lowered! Several need to be lowered substantially.
Why is the Coliseum never required to “break even”? If Solid Waste rates are going to be raised, when is the Coliseum going to be required to break even?
Keep in mind the City hired yet another consultant to look at their rate structure. If their report suggests raising anything but Solid Waste and closing the Coliseum, it will be obvious it wasn’t a serious study.
I wonder where all that extra cash goes? The total excess in Enterprise Funds is more than $11,000,000.
Conundrum!
It is a common practice to set rates in enterprise funds with an eye toward funding future capital costs. Break even, in this sense, includes designing a rate structure that funds annual costs and an incremental portion of future capital asset costs. Those balances may imply surpluses being built up for construction or renovation purposes to avoid issuing debt. One could argue that debt should be used as the debt service is paid by users of the service as they consume the asset, others argue pay as you go spreads the cost generationally. It’s a policy decision.
That would make sense if it was disclosed. Instead money is transferred to fund a lot of other things. Sometimes it makes it back to the original fund, frequently it doesn’t.
Yes, the Council has an overarching philosophy of “pay for use” but it is not consistent. Not all of the Enterprise Funds are rate based–certainly not the Coliseum.