The past year has forced local government utilities to make difficult decisions about how to maintain operations while providing essential services during an infectious disease pandemic, as discussed in several of our past blog posts (here, here, and here).
Financial viability is a cornerstone of a utility’s ability to weather a proverbial storm that disrupts revenue flows. A viable system is one that functions as a long-term, self-sufficient business enterprise while providing reliable water services. The EFC has been on the look-out for stories of utilities and municipalities that are making steps towards financial viability, even in the midst of challenges like COVID-19.
The town of Ahoskie, located in rural Hertford County, has been implementing financial best practices over the past few years to decrease expenses and pay off debt, which set them up to survive a financially straining event like a lockdown. Below is a part of their story, here is a video that highlights the work they’ve done, and here is a more in-depth report. More resources regarding evaluating costs can be found at this webpage.
The year 2010 marked the start of an unusual period in the water sector. For five years running, total capital outlays by local governments in the United States on water and wastewater infrastructure declined year after year. This period coincides with the Great Recession and towards the end of spending under the American Recovery and Reinvestment Act (ARRA). Yet infrastructure continued to age, and construction costs continued to rise at about 2.6 percent per year during that period. Have we finally come across a sign that capital expenditures on water and wastewater infrastructure may be growing again?
Stacey Isaac Berahzer is a Senior Project Director for the Environmental Finance Center at the University of North Carolina, and works from a satellite office in Georgia.
In each of the 12 months of the year, at least one local government in Georgia is ending its fiscal year. The chart below reflects the distribution of fiscal year ends (FYEs) for the 530 municipalities in the state. Some states stamp out this variety by handing down a fiscal calendar to local governments. But, the flexibility in Georgia perhaps speaks to the home rule nature of the state. The relevant Georgia statute says that when a local government is created, “The governing authority shall establish by ordinance, local law, or appropriate resolution a fiscal year for the operations of the local government.”
Since the local governments have control over the FYE, it can be assumed that each one has selected a date that has some advantage to the staff or the community involved. The eight (8) governments that end their fiscal year in August may have a busy summer, but they perhaps they want to be “ahead” of the start of the federal fiscal year in October. Apart from local preference, this staggered approach among the local governments may also have an advantage to some external entities such as third-party auditors. It seems that audit firms that serve local governments may have a more muted “busy season” since all of their clients aren’t reporting on the same schedule. But, might there be other entities for which this approach is less convenient?