Bremen hears Baker Tilly Report for water financial management reports

BREMEN—LAST month, the Bremen Town Council heard the 2021 financial management report for the municipal water utility from Baker Tilly, as presented by Senior Consultant David Dominguez.

Dominguez shared that although the town’s water utility has been fairly consistent historically, 2021 saw a dip in fund balances. “In 2021, there was a rate increase that was enacted July 1,” he explained. “But there was also an increase of consumption… Users actually increased their water and usage in 2021 as opposed to 2020 and was actually higher than 2019 as well. That’s why you see that jump.”

There was also an increase in materials and supplies costs. Despite that,

Bremen’s water dept. superintendent, Alex Mikel, has worked hard to stem the flow as much as he can. “Alex has done a good job in buying and stocking up some of that inventory to hedge that price increase going forward.” Between the two variables, there was a $173,152 difference in outgoing receipts.

Despite an overall $80,661 decrease in the town’s fund balances from 2020 to 2021, Bremen still has more than the recommended fund reserves. The reserve amount is based on the minimum reserve levels that the Town of Bremen agreed to when the 2015 bonds were issued and good financial industry practices, like reserving one year’s capital spending. This is not a “rainy day” fund, but rather is to be viewed as a “minimum balance” amount.

Moving forward, the Town of Bremen is anticipating another rate increase on July 1 of this year. Baker Tilly presented a theoretical operations and materials budget for estimated operating disbursements 2022-2026 based on actual cost form previous years and adding a 3% inflation increase from 20232026. “2023-2026 we were kind of conservative. We calculated some additional rate increases for the town,” Dominguez said. The estimated Operating Disbursement total was $922,800 for 2022, $922,000 for 2023, $950,600 for 2024, $980,100, and $1,010,400 for 2026.

In summary, Dominguez was very encouraging. “Keep doing what you’re doing; you’re doing a really great job. You’re managing this utility really well. The one thing that I would recommend is to look into implementing lower, more frequent rate increases so you can stay ahead of the game.” He went on to explain that raising the rate annually or biennially would prevent sudden large rate increases, like what the Town of Bremen has had to deal with their sewer rates last year.

Even with the increase of monthly rates, the town’s utility fees will still be below the state average of $37.78 for water and $43.41 for sewer. This is based on a flow of 4,000 gal. After the town has implemented phase two, the average water bill will be $26.82 and the average sewer bill will be $29.93.