Posted 1/12/16 (Tue)
By Kevin Killough
Falling revenues are having a ripple effect across the oil patch.
Tioga, Ray, and Crosby are likely to take another hit to their budget beginning in March. And residents may see another increase in their water and sewer rates.
At the last Tioga commission meeting, Mayor Drake McClelland said the Western Area Water Supply Authority is taking away the city’s revenue from industrial water sales.
“The bottom line? WAWSA is having trouble meeting their notes,” McClelland told the commission.
The proposal is still in the discussion phase, but McClelland said it’s likely to pass at the next board meeting on Jan. 20.
The revenues account for about $80,000 a month, McClelland said.
As a result of the lost revenue, the city is freezing promotions of employees, eliminating a planned cost-of-living raise this year, and restricting overtime to emergencies only.
Commissioner John Grubb, who was unable to attend the commission meeting, said afterwards that it was another “tightening of the belt.”
“We have to do what we have to do,” he said.
Ray is also being impacted by the move, and Ray Auditor Ronda Rustad said the timing is problematic.
“The hard part is that it affects us after we’ve already budgeted everything,” Rustad said.
The Ray Commission hasn’t met since the news was passed down, so the commission hasn’t discussed what steps to take in response.
Crosby is in a better position, according to Bert Anderson, who is on the WAWSA board.
Anderson said the reduction in industrial water sale revenues will cost the town roughly $20,000, but they have enough saved that water rates will not have to be raised.
“We have a sufficient amount in our rainy day fund for a rainy day,” Anderson said.
When WAWSA was created to bring water to the rural parts of North Dakota that were growing rapidly in the boom, a series of loans was backed by the state to bring the project to fruition.
Those loans were financed from industrial water sales, but WAWSA was paying cities any revenues that exceeded 2010 sale levels.
It’s that excess that WAWSA is proposing to now keep in order to meet its obligations.
The authority is also having to pass some of its future obligations onto the districts within its system.
Jaret Wirtz, executive director of WAWSA , said the state is reluctant to guarantee as great a portion of the loans as industrial sales plummet.
As a result, $20 million worth of loans the authority needs are going to have to be supported with residential water sales, the cost of which will be passed on to the entities within the system, including R&T and the Williams Rural Water District, which supplies water to Tioga, Ray, and Crosby.
This means that water rates will likely have to be increased to raise revenue to meet these new obligations.
Wirtz said most projects of this nature in the state are financed with residential sales, but WAWSA took advantage of the large volume of industrial sales in the oil patch. The restructuring will bring the financing in line with other practices in the state.
In the last biennium, the North Dakota legislature voted to approve a bill that allows for private entities to build infrastructure to deliver water to industrial customers.
As a result the authority, Wirtz said, has also been hit by increased competition from other suppliers, in addition to reduced demand from the oil industry.
Wirtz said the proposals are not absolutely certain to pass in their current state, but steps will need to be taken in order for the authority to meet its obligations.
“While everyone agrees we have to do something, what that something will be is not certain,” Wirtz explained.