Havre de Grace's city water and sewer fund, known as Fund 9, was $1.7 million in deficit by the end of fiscal year 2013 and is danger of "financial failure," water and sewer commission members Garrett Lyttle and Bill Russell told the mayor and city council Monday night.
In an annual report on the severely struggling fund, Lyttle said revenue to the fund fell by $814,000, as capital cost recovery fees failed to meet budgeted projections by $755,000.
That was caused by the city getting 36 fewer building permits than expected, about half of what city officials had hoped.
Lyttle added that if a planned increase of $240,000 in personnel expenses for 2014 is carried out, the fund would sink about $475,000 more in the red from personnel costs and rates alone.
"The debt burden, the reduction of consumption, a continued stagnation in building in the housing industry here in Havre de Grace, the continued deferral of needed capital projects, an aging infrastructure, and the inability to establish an emergency fund for failures in the system are leading us down a slippery slope that the commission feels could result in a financial failure of the water/sewer enterprise fund," the report warned.
The report urges the administration to resolve issues that are delaying construction on already-approved projects and find ways to cut costs in all areas of the water and sewer fund, including human resources costs.
It also recommends that water and sewer fates be effective on April 1 so they apply to the entire fiscal year, as the current practice of setting rates to start Oct. 1 results in a 25 percent impact on anticipated revenue changes from the last fiscal year.
Council President Randy Craig said the council will review the submitted report closely over the holidays and will hopefully have a separate meeting as a public work session.
"Every member of this city council takes that effort very seriously," Craig said.