LR board previews ’21 budget for sewer

Utility anticipates $1.1M revenue dip

The Little Rock Water Reclamation board of commissioners previewed Wednesday a $109 million budget for 2021.

The utility anticipates a slight increase in expenditures as well as a $1.1 million loss — a 1.8% decline — in revenue in 2021 compared with 2020 as a result of the coronavirus pandemic.

Domestic consumer water consumption remained about the same during the pandemic, while nondomestic usage declined because of coronavirus-related business closures.

The fiscal impact of the pandemic led the utility to negotiate a deal with the Arkansas Natural Resources Commission that will allow the utility to defer principal payments on debt obligations it was scheduled to pay from 2021 through 2023 and to extend the maturities of each bond for three years.

The deferments will save a total of $16.6 million from 2021 through 2023 without adding additional loan costs, according to the utility’s budget document.

The Little Rock Board of Directors ratified the utility’s agreement with the Natural Resources Commission by approving a series of ordinances at Tuesday night’s regular meeting.

The utility put a hiring freeze in place because of the pandemic and had 14 vacant positions as of Tuesday, chief financial officer Michael Rhoda told commissioners Wednesday. No new positions are budgeted for 2021.

The utility expects to end the year with a nearly $4 million surplus.

“Since the beginning of covid, or since March, staff has worked extra hard at conserving cash,” said Greg Ramon, the utility’s chief executive.

Rates are scheduled to increase by 4.75% on Jan. 1, marking the fifth year in a planned series of five annual rate increases. In 2015, the city approved rates for 2017 through 2021 with a 4.75% increase to take effect each year.

The biggest line item increase in the utility’s expenditures for 2021 is for contract services, partly because an additional $140,000 was allocated to overhaul equipment at the Fourche Creek treatment plant. The utility’s contract with Central Arkansas Water to provide billing services is also increasing by 3% to $825,000.

The sewer utility’s board of commissioners is scheduled to vote on the 2021 budget at its regular meeting in November.