Financial expert disputes need for Oxnard water rate increase

ColumnLogo-1By Phil Molina

Friends,BudgetBroken

I got the facts that I used for this report directly from the city’s budget page -31, and from the city’s most recent audit page 28.

Additional data came from last council meeting agenda on the city’s budget namely, Mr. Lillio’s response to Councilman Perello’s questions: 1. what are the cash reserves in water, and 2. Is there enough reserves to get us through the year? Joseph’s first response was $29,000,000 cash reserves in water; and the second answer was “no” because cash reserves need to exceed 90 days of O&M costs plus debt service plus infrastructure work.

First, when you need major infrastructure work you NEVER  use operating cash reserves. You go to the bank and borrow funds just as anyone does when major home improvements are needed. So Joseph’s answer would mean no amount of cash reserves are enough since no reserve amount can ever cover major infrastructure improvements. However, let’s look at the rest of Joseph’s requirements for reserves to see if using his own measuring stick a water rate increase is really needed at this time.

OxnardWaterDept

So based on his water budget for 15-16 we see the following:

     15-16 budget
tot rev    $                   51,245,153
O&M exp    
 sal-etc    $                      5,172,740
 s&s    $                   26,594,000
ISF    $                      3,713,652
utilities    $                      2,792,440
other exp    $                      2,698,081
tot yr O&M    $                   40,970,913

Ok, so 90 days worth of O&M equals

​$10,242,728​.

According to Joseph the cash reserves in water equals $29,000,000. But he didn’t explain how it came down from

$34,617,000 since his budget shows only a $1 million decrease. Nonetheless, it is clear to everyone that even using Joseph’s cash reserves there is more than enough to cover 90 days of O&M.

 reserves  $               29,000,000
90 days O&M  $         –      10,242,728
OK passes  $               18,757,272

OK, but is there still enough to also cover the debt pmts? Again using his budget numbers we find even after covering 90 days O&M there still is enough reserves to also cover the debt payments.

   $               29,000,000
debt pmts  $      –         10,242,728
OK passes  $               18,757,272
debt pmts  $  –              3,064,149
positive OK  $               15,693,123

So

​even when we use Joseph’s formula there is more than enough cash reserves in the water enterprise to prove the city has NO JUSTIFICATION FOR WATER RATE INCREASE AT THIS TIME!

If I missed anything let me know.

Phillip M. (post responses to this article or on our Facebook page)

________________________________

Phil Molina is an Oxnard resident, former Oxnard Finance Director and “whistleblower,” who exposed alleged corruption, and was fired. He sued and won a large award, after many years of litigation.

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