Mercer Sanitation District Mulls Rate Change

Possible Rate Change Could Earn More Money For District While Saving Money For Minimum Users

Larry Catlett (right), attorney for the Mercer County Sanitation District, goes over a property damage claim to the board of directors, including Drew Rice and Bruce Wade (left) in 2017. (Stock image).

Robert Moore

Herald Staff

[email protected]

The Mercer County Sanitation District is considering a rate structure revision that could provide relief to customers complaining that the minimum rate is too high, while raising revenue for the financially strapped utility.

Many Burgin residents complain about the $40 minimum fee, which is charged whether the customer uses 2,000 gallons per month or not. While the Sanitation District charges the same rate for its customers in other areas in Mercer County, Burgin has a larger percentage of people on lower incomes than the rest of the county.

Some of the options being considered could provide relief to minimum users, while charging higher volume users slightly more. Sanitation District Executive Director Mike Sanford said he would incorporate some of the rate study into the budget.

Under one option, the minimum payment went down while raising $10,000 more for the district, which would help them balance the budget.

The rate structure revision was one of the options considered by the board of directors last week while reviewing a draft budget for the upcoming fiscal year, which starts July 1. The board had already reviewed the audit for the 2019 fiscal year, which was presented by Accountant Craig Butler of Kerbaugh, Rodes and Butler in Danville.

While the audit was “clean”—Butler said auditors had no issues getting information and found no issues in how the district handled its finances—it did not paint a rosy picture of the Sanitation District’s finances. At one point, on June 30, 2019, the district had no unrestricted cash in the bank.

“The finances were fairly tight,” Butler told the board.

Including depreciation in the amount of $407,286, which is a non-cash expense, and other expenses, the Sanitation District’s net position was $425,431 in the negative. 

“It looks horrible, but it’s not nearly as bad as it looks on paper,” Butler said.

Sanford attributed the negative position to overruns in costs and time in the Burgin sewer project, including the lawsuit filed against them by Todd Johnson Contracting Inc. of Danville. Sanford said he hopes the district’s finances will improve when  the lawsuit is resolved and construction on the Burgin sewer system ends.

Sanford said the contractor has finished but has been provided with a punchlist of items to complete.

Due to the COVID-19 pandemic, Sanford said trying to wrap up the project was challenging.

“I really don’t know how to forecast tap fees at this point,” he said.

Sanford said there really wasn’t much fat to trim on the budget. He said they could look more closely at reducing utility costs and possibly make changes to debt service. At the same time, because so many businesses have been shut down due to the pandemic, other ways of revenue were not currently available.

“It isn’t the best time to raise rates,” Sanford said.

The district would have to get permission from the state and federal government, who financed the sewer project, before making any changes to the rate structure.

The next board meeting will be Thursday, June 4, at 2 p.m.

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