Smithfield is paying the cost of deferring maintenance on its water and electric systems, the Town Council heard during last week’s budget meeting.
“The water and sewer distribution and collection system, the water plant, have been ignored,” said Pete Connet, a former Smithfield town manager who was most recently interim director of public utilities. “By not addressing those needs, not only do things not work right, but we end up spending money that we don’t need to spend.”
Ken Griffin is the town’s new director of utilities. He also attended the budget meeting.
Council members said they were done deferring water and electricity department maintenance. They told the heads of those departments to put dollars in their budget for equipment upgrades and purchases.
At the water plant, the council plans to spend $380,000 next year on new equipment, up from $184,000 in the current year. In 2011-12, spending on equipment dipped to just $35,000. The $380,000 will pay for new water-tank mixers, pipes and pumps.
The sewer-collection system will see an even bigger spending increase in 2014-15. This year, Smithfield is spending about $274,000 on replacing and repairing equipment. Next year, it will spend about $946,000, with $340,000 going to buy a specially-equipped truck that vacuums out sewer lines.
And in the electric department, spending on equipment will jump from $252,000 this year to $584,000 in the year ahead. That tally includes $300,000 for smart meters, which should allow the town to reduce personnel costs in that department.
In all, Smithfield will spend about $1.9 million on new equipment for its utilities departments. The electricity department can pay for its equipment out of its operating budget. The water and sewer department will have to draw $800,000 from reserves, but that will still leave about $5 million in reserves there.
The town began deferring equipment purchases during the recession, when revenue dipped.
Electric fund transfers
The council continued to debate whether it should transfer money from the electric fund to the general fund.
Town Manager Paul Sabiston explained the consequences of ending the practice. Essentially, he said, for every $90,000 the council stopped transferring to the general fund, it would have to cut spending by that amount or raise the property-tax rate a penny. The town’s tax rate is currently 57 cents for every $100 of property.
This year, Smithfield is transferring about $700,000 from its electric fund to its general fund. Some of those dollars help pay salaries for employees whose duties span both departments. The finance director is one such employee. Other dollars are essentially property taxes the electric department would have to pay if it were a private utility.
The rest of the money, about $300,000, is what Sabiston considers a discretionary transfer. The town manager said he sees room in the coming budget to reduce that transfer.
“I think we can reduce that transfer somewhat, but I’m a little cautious about this electric year because of all these moving parts,” he said.
Those moving parts include an increase in the sales tax on electricity bills and attempts by public power towns to persuade Duke Energy Progress to buy out their shares of power plants in North Carolina.
Last September, then-public utilities director Earl Botkin told the council that Smithfield had a problem: Sand from the Neuse River was getting sucked into the water-treatment plant, damaging pipes and pumps and collecting at the bottom of the reservoir, decreasing its capacity.
Smithfield agreed to pay the Wooten Company $60,000 to come up with a solution. After months of study, the company came back with five scenarios, ranging from installing a new type of intake pump to picking a new intake spot about four miles away.
The company recommended building a second intake about 100 feet upstream. The new intake would have screens to keep out much of the sand. This option would cost about $2.35 million to build and $44,000 a year to operate.
The company recommended Smithfield apply for a grant that would cover the cost of construction. But Mayor John Lampe said he wants a second opinion on Wooten’s recommendations, and he wants to pay a consultant $125 an hour to give that opinion. The consultant, Tom Speight, was Fayetteville’s utilities director and faced similar problems there; Lampe recently hired Speight for his own business.
Lampe said Speight is used to operating a water system and finding cheap solutions to problems. Lampe will come back to the council with more information on what work Speight would do for the town.
Councilman Travis Scott put together a list of how much each department gives employees for cellphone use. While going through the utilities budgets, councilmen questioned why some town employees get $600 and others $1,500 a year for cellphones. The mayor suggested a cap of no more than $600 a year, comparing the cost to his own cell phone bill.
Scott had already drawn up a plan that showed a potential for $10,000 in savings if the town made the cap at $600 a year per employee. The council asked Sabiston to look into the effects of creating a cap.
Some councilmen also questioned why the electric department is buying a Chevy Volt, an electric-gas vehicle that costs roughly $35,000. The town is receiving an N.C. Solar Center Grant that knocks down the price of the car and charging station to about $28,500. Lampe asked whether it was ethical to buy the car just because the town had a grant to do so. The council didn’t make a decision on what to do with the car but still plans to buy it.
Councilmen Perry Harris and Roger Wood did not attend the budget meeting. The next budget meeting is scheduled for 6 p.m. Wednesday, May 7, in the town council chambers.