Using utility-fee revenue as city cash machine will stop as requirement of USDA loan

by Kathleen Sloan | April 25, 2020
5 min read
 The City of Truth or Consequences has long used its utility-fee revenue to pay for city-wide expenses instead of churning that money back into the various utilities, but that practice is about to change, at least for the water and sewer departments, due to oversight that comes with loans from the U.S. Department of Agriculture. 

​For more information on the last five years of utility-fee transfers and the current state of utility infrastructure, read the Sierra County Sun’s previous article: 
Analysis: Why Truth or Consequences City Commissioners don’t have to be transparent, By Kathleen Sloan, December 2, 2019

At the Dec. 16 Public Utility Advisory Board Meeting, City Manager Morris Madrid informed the Board it would have a group meeting with the City Commission on Jan. 22 to hear how to set utility rates for the water and sewer department based on cost, which is a requirement of the loan agreement with the USDA. 

The City recently was approved for a $5,487,000 loan and $3,930,000 grant from the USDA to fix the water pipes downtown, as well as to replace critical equipment at the Cook Street pump station and to add a water tank. The loan/grant is just for water-system repairs.

However, the city recently combined the water and sewer departments, which may be why the USDA can oversee rate-setting for both water and sewer fees. It may also be because the City has an outstanding USDA loan/grant for sewer-system repairs.  

Although Madrid said water and sewer rates would be studied, he gave a contradictory statement to PUAB Member Ron Pacourek, indicating they would remain at the 5-percent-annual increase.  

Pacourek, for months, asked the board to reconsider the 5-percent annual rate increase for the sewer and solid waste utilities, noting that neither has a sunset clause. At the last meeting, the discussion was tabled, which meant it should have shown up on the Dec. 16 agenda. 

Madrid said he took it off the agenda because “the increase in the [sewer] rate is due to the USDA loan and can’t come off until the debt is paid off.” 

Madrid did not state what USDA loan he was referring to, but the City’s 2017-18 financial statement reveals it received a $4,575,400 grant and $715,000 loan from the USDA to fix part of the sewer system in 2016. 

In addition, the City Commission’s July 10, 2019 minutes reveal the USDA granted another $485,600 and loaned the city an additional $315,000 for further repairs to the sewer system. 

It is unclear from city minutes if the second USDA grant/loan was wrapped into the 2016 grant/loan, however, the first loan expires in 2059. 

Therefore, if Madrid is correct, the sewer fee will go up 5 percent a year through 2059. 

Since the sewer rate is compounded every year, that is, builds on the 5-percent increase from the year before, residents and businesses face massive rate increases in coming years. 

The same applies to the solid-waste utility fee. 

Pacourek insisted, several times, looking at Deputy City Clerk Angela Torres that the solid waste department 5-percent-a-year increase still should have been put on the agenda, since that department has no USDA loan and no USDA oversight. 

Torres told him the agenda is set by Madrid and PUAB Chairman Jeff Dornbusch. Neither Madrid nor Dornbusch explained why the item was pulled, but Dornbusch doubted there was a 5-percent rate increase for solid waste and had to be informed otherwise.  

The PUAB and City Commission training will be given by Rural Community Assistance Corporation, which adds another twist to the story of USDA oversight on utility rates.

Madrid explained the USDA “requires” the City to take out a bridge loan for the first part of the project, and repays the loan eventually, when certain conditions are met. 

The RCAC is to give the city a $943,000 bridge loan, the application approved by the City Commission at the Nov. 13 meeting, with no documentation or loan agreement in the City agenda packet. 

It appears the conditions the City has to meet to get the bridge loan paid for by the USDA are good financial management practices. 

According to the RCAC website, the USDA subcontracts the RCAC, a non-profit loan and education organization formed in 1978. Its mission is primarily to ensure rural residents have clean water. As part of its mission it trains rural governments and communities how to run their utilities, to prevent fiscal waste and mismanagement, especially of loan and grant funds. 

The USDA loan-conditions letter, in the Nov. 13 City Commission packet, states, “[utility] Revenue cannot be used to pay any expenses which are not directly incurred for the facility financed by USDA.” 

That means the City can no longer transfer money out of the water and sewer funds and into the general fund. 

Although the water system has been in dire need of repairs, leaking 47 percent of the water transported, according to a Sept. 2019 engineering study, the City transferred nearly $800,000 out of the water fund in fiscal-year 2017-18, according to that year’s financial statement.

According to the 2019-20 City budget, $122,170 will be transferred out of the water fund and $238,902 out of the sewer fund this year. 

The question residents should be asking the RCAC during the Jan. 22 training session—If questions are allowed—is if transfers out of the utility funds—In the past and future—will be considered in determining rates. 

The transfers out have artificially inflated utility fees.

If transfers out of all utility funds are not stopped, not just in the water and sewer department, the City can raise the electric and solid waste rates, continuing the practice of using the funds as a cash machine. 

Transfers from utilities funds were:
— nearly $2.8 million in 2012-13,
— $2.1 million in 2013-14, 
— nearly $1.5 million in 2014-15,
— $4.2 million in 2015-16, 
— nearly $3.7 million in 2016-17,
— nearly $2.7 million in 2017-18, according to financial statements. 

The 2018-19 audit and financial statement is not available.  

The City budget for 2019-20 predicts $2.1 million will be transferred out of the utilities this year, but the City has already exceeded the budget in several areas. 

author
Kathleen Sloan is the Sun’s founder and chief reporter. She can be reached at kathleen.sloan@gmail.com or 575-297-4146.
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Understanding New Mexico's proposed new social studies standards for K-12 students

“The primary purpose of social studies is to help young people develop the ability to make informed and reasoned decisions for the public good as citizens of a culturally diverse, democratic society in an interdependent world.”
—National Council for the Social Studies 

Reader Michael L. Hayes of Las Cruces commented: What impresses me is that both the proposed standards and some of the criticisms of them are equally grotesque. I make this bold statement on the basis of my experience as a peripatetic high school and college English teacher for 45 years in many states with many students differing in race, religion, gender and socioeconomic background, and as a civic activist (PTA) in public education (My career, however, was as an independent consultant mainly in defense, energy and the environment.)

The proposed social studies standards are conceptually and instructionally flawed. For starters, a “performance standard” is not a standard at all; it is a task. Asking someone to explain something is not unlike asking someone to water the lawn. Nothing measures the performance, but without a measure, there is no standard. The teacher’s subjective judgment will be all that matters, and almost anything will count as satisfying a “performance standard,” even just trying. Students will be left to wonder “what is on the teacher’s mind?” or “have I sucked up enough.”

Four other quick criticisms of the performance standards. One, they are nearly unintelligible because they are written in jargon. PED’s use of jargon in a document intended for the public is worrisome. Bureaucrats often use jargon to confuse or conceal something uninformed, wrong or unworthy. As a result, most parents, some school board members and more than a few teachers do not understand them.

Two, the performance standards are so vague that they fail to define the education which teachers are supposed to teach, students are supposed to learn, and parents are supposed to understand. PED does not define words like “explain” or “describe” so that teachers can apply “standards” consistently and fairly. The standards do not indicate what teachers are supposed to know in order to teach or specify what students are supposed to learn. Supervisors cannot know whether teachers are teaching social studies well or poorly. The standards are so vague that the public, especially parents or guardians, cannot know the content of public education.

Three, many performance standards are simply unrealistic, especially at grade level. Under “Ethnic, Cultural and Identity Performance Standards”; then under “Diversity and Identity”; then under “Kindergarten,” one such standard is: “Identify how their family does things both the same as and different from how other people do things.” Do six-year-olds know how other people do things? Do they know whether these things are relevant to diversity and identity? Or another standard: “Describe their family history, culture, and past to current contributions of people in their main identity groups.” (A proficient writer would have hyphenated the compound adjective to avoid confusing the reader.) Do six-year-olds know so much about these things in relation to their “identity group”? Since teachers obviously do not teach them about these other people and have not taught them about these groups, why are these and similar items in the curriculum; or do teachers assign them to go home and collect this information?

Point four follows from “three”; some information relevant to some performance measures requires a disclosure of personal or family matters. The younger the students, the easier it is for teachers to invade their privacy and not only their privacy, but also the privacy of their parents or guardians, or neighbors, who may never be aware of these disclosures or not become aware of them until afterward. PED has no right to design a curriculum which requires teachers to ask students for information about themselves, parents or guardians, or neighbors, or puts teachers on the spot if the disclosures reveal criminal conduct. (Bill says Jeff’s father plays games in bed with his daughter. Lila says Angelo’s mother gives herself shots in the arm.) Since teacher-student communications have no legal protection to ensure privacy, those disclosures may become public accidentally or deliberately. The effect of these proposal standards is to turn New Mexico schools and teachers into investigative agents of the state and students into little informants or spies.

This PED proposal for social studies standards is a travesty of education despite its appeals to purportedly enlightened principles. It constitutes a clear and present danger to individual liberty and civil liberties. It should be repudiated; its development, investigated; its PED perpetrators, dismissed. No state curriculum should encourage or require the disclosure of private personal information.

I am equally outraged by the comments of some of T or C’s school board members: Christine LaFont and Julianne Stroup, two white Christian women, who belong to one of the larger minorities in America and assume white and Christian privileges. In different terms but for essentially the same reason, both oppose an education which includes lessons about historical events and trends, and social movements and developments, of other minorities. They object to the proposal for the new social studies standards because of its emphasis on individual and group identities not white or Christian. I am not going to reply with specific objections; they are too numerous and too pointed.

Ms. LaFont urges: “It’s better to address what’s similar with all Americans. It’s not good to differentiate.” Ms. Stroup adds: “Our country is not a racist country. We have to teach to respect each other. We have civil rights laws that protect everyone from discrimination. We need to teach civics, love and respect. We need to teach how to be color blind.”

Their desires for unity and homogeneity, and for mutual respect, are a contradiction and an impossibility. Aside from a shared citizenship, which implies acceptance of the Constitution, the rule of law and equality under the law, little else defines Americans. We are additionally defined by our race, religion, national origin, etc. So mutual respect requires individuals to respect others different from themselves. Disrespect desires blacks, Jews or Palestinians to assimilate or to suppress or conceal racial, religious or national origin aspects of their identity. The only people who want erasure of nonwhite, non-Christian, non-American origin aspects of identity are bigots. Ms. LaFont and Ms. Stroud want standards which, by stressing similarities and eliding differences, desire the erasure of such aspects. What they want will result in a social studies curriculum that enables white, Christian, native-born children to grow up to be bigots and all others to be their victims. This would be the academic equivalent of ethnic cleansing.

H.E.L.P.

This postmortem of a case involving a 75-year-old women who went missing from her home in Hillsboro last September sheds light on the bounds of law enforcement’s capacity to respond, especially in large rural jurisdictions such as Sierra County, and underscores the critical role the public, as well as concerned family and friends, can play in assisting a missing person’s search.

Reader Jane Debrott of Hillsboro commented: Thank you for your article on the tragic loss of Betsey. I am a resident of Hillsboro, a friend of Rick and Betsey, and a member of H.E.L.P. The thing that most distresses me now, is the emphasis on Rick’s mis-naming of the color of their car. I fear that this fact will cause Rick to feel that if he had only gotten the facts right, Betsey may have been rescued before it was too late. The incident was a series of unavoidable events, out of everyone’s control, and we will never know what place the correct color of her car may have had in the outcome. It breaks my heart to think that Rick has had one more thing added to his “what ifs” concerning this incident.

Diana Tittle responded: Dear Jane, the Sun undertook this investigation at the request of a Hillsboro resident concerned about the town’s inability to mount a prompt, coordinated response to the disappearance of a neighbor. From the beginning, I shared your concern about how our findings might affect Betsy’s family and friends. After I completed my research and began writing, I weighed each detail I eventually chose to include against my desire to cause no pain and the public’s right to know about the strengths and limitations of law enforcement’s response and the public’s need to know about how to be of meaningful assistance.

There was information I withheld about the state police investigation and the recovery. But I decided to include the issue of the car’s color because the individuals who spotted Betsy’s car emphasized how its color had been key to their identification of it as the vehicle described in Betsy’s Silver Alert. Because the misinformation was corrected within a couple of hours, I also included in this story the following editorial comment meant to put the error in perspective: “The fact that law enforcement throughout the state was on the lookout in the crucial early hours after Betsy’s disappearance for an elderly woman driving a “light blue” instead of a “silver” Accord would, in retrospect, likely not have changed the outcome of the search” [emphasis added].

I would also point to the story’s overarching conclusion about the inadvisability of assigning blame for what happened: “In this case, a perfect storm of unfortunate circumstances, many of them beyond human control, hindered the search that it would fall to Hamilton’s department to lead.”

It is my hope that any pain caused by my reporting will eventually be outweighed by its contribution to a better community understanding of what it will take in the future to mount a successful missing person’s search in rural Sierra County.

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