WATER FUNDS
A special meeting of the Fort Scott City Commission was held September 14th, 2022, at 5:00 p.m. in the City Commission Meeting Room, 123 S. Main Street, Fort Scott, Kansas.
Consideration of adoption of 2023 Budget: Mayor Harrington asked Susan Bancroft if any changes had been made since their last budget work session.
Michael Hoyt reminded the Commission of Kansas State Statute 12-825b which states that any city of the first, second, or third class water funds should stay in that fund. He believes it should not be transferred to any other fund.
Susan explained the debt service to the Commission. She also said that water funds can be transferred, but not sewer funds. There have been no transfers last year, nor will there be this year.
Note: By state statute, Water funds can be transferred, but not until they have been classified as “surplus and not needed for the purpose they were collected for”. As explained below, the transferred funds were, and are, all needed for renewal of our distribution system and debt as stated by our consulting engineers.
Walker moved to approve the 2023 Budget. T. Van Hoecke seconded. T. Van Hoecke, S. Walker, M. Wells, and K. Harrington voted aye. J. Jones voted no. Motion carried 4-1.
Kan. Stat. § 12-825d
“Except as otherwise hereinafter provided, in any city of the first, second or third class owning a waterworks, fuel, power or lighting plant, the revenue derived from the sale and consumption of water, fuel, power or light shall not be paid out or disbursed except for the purpose of operating, renewing or extending the plant or distribution system from which such revenue was derived, the payment of interest on outstanding bonds issued for the construction, extension or purchase thereof, and the payment of the salaries of the employees”.
The statute further states that:
At any time that there may be a surplus of such fund, it shall, if needed to redeem bonds, be quarterly placed in a sinking fund, which shall only be used for the purpose of redeeming bonds that may have been issued for acquiring, renewing or extending said plant or distribution system, or making renewals or extensions thereto. When any surplus of either the operating fund or sinking fund is not needed for any of the above stated purposes, said surpluses: (a) May be transferred and merged into the city general revenue fund or any other fund or funds of such city;.
Verne Miller, Attorney General, State of Kansas, in 1971, stated in an opinion that: “It is fair in this instance, however, to apply the utilitarian definition suggested in K.S.A. 12-1675, that surplus funds are “moneys not immediately required for the purposes for which the moneys were collected or received”.
The question is whether the governing body of Fort Scott has ever declared water generated funds as being “surplus” and “not needed for any of the above stated purposes”, or did finance director act on her own in transferring needed funds to the general fund?
As evidenced by the existing “water shortage”, the concerns expressed at the last commission meeting regarding low water pressure for a potential proposed new housing addition, the disastrous Main Street fire of 2005 which could not be put out due to the lack of water, the loss of the Catholic Church for the same reason, and many other examples of low water pressure and volume, as well as the City Comprehensive Plan adopted by the governing body of 2018 which states that “The distribution study performed by P.E.C. in 1998 was necessary as the system was not performing as needed with water loss identified, tower capacity shortfalls noted, causing low water pressure throughout the city. The water tower (mentioned above) helped to address these issues, but enlargement of lines was also reported to be necessary”. The plant had been upgraded with added water storage in 2006 at a cost of $5,790,000 and was financed through State Revolving Loan Funds. With debts like this and needed distribution projects left undone, how could the governing bodies even consider the possibility of having “surplus” funds in the water department? Millions of dollars of water funds have been illegally transferred and spent and the problems still loom heavily on our shoulders because of misguided ideology. WE NEED OUR WATER LINES FIXED!!!
Quote from finance director in 2021 Budget booklet: “Providing public safety, quality services and improved infrastructure have always been the goals of the City of Fort Scott administration”. Improved infrastructure would necessate NEW WATER LINES IN FORT SCOTT!!