Council Delays Action on Water Fund Issue

The City Council delayed taking action this week on a proposal to change how money is transferred from the city’s water fund to the general fund. The issue will return to the City Council for consideration in late January after further review by a citizens audit committee.

Community activist Berklee Maughan, who prompted the proposal by his inquiries, alleged improprieties in the way past transfers were made and called for an official policy.

City accountants and attorneys said they found no wrongdoing in the transfers, which are made to reimburse city staff for time spent on water projects. However, in the future, they hope to document the transfers more exactly, officials said.

Still, after reviewing the new method proposed for calculating and documenting the transfers, Maughan, a retired accountant, insisted that the plan is seriously flawed.

He said the proposed system is inconsistent with reimbursement plans calculated in other city agencies, such as the Redevelopment Agency, and said it could lead to miscalculations.

Since 1980, when the city acquired the water agency, transfers had been made using a flat rate of about $670,000 a year to reimburse costs, based on employees’ salaries.

The proposed method is based on a combination of administrative costs, overhead and service costs calculated each year with a more formal time-keeping system. Under the new system, about $980,000 would be transferred between funds for the 1995-96 fiscal year.

Maughan recommended hiring an outside accounting firm to audit past money transfers and suggested privatizing management of the water agency.

City Council members said they were reluctant to spend money on an accounting “gray area” that only has the appearance of impropriety. Instead they referred the issue back to the Audit Committee.

“I don’t care if it takes six days or 60, I want to know exactly how much money should be transferred from one fund to the other,” Councilman Thomas R. Saltarelli said.