GRU presents budget reductions, Mayor Ward pushes to reduce paper bills

BY JENNIFER CABRERA

GAINESVILLE, Fla. – At a May 15 Gainesville City Commission Special Meeting, the commission heard a proposal to reduce Gainesville Regional Utilities’ (GRU) budget by about $3.4 million for FY24.

GRU Budget Reduction Plan

Mark Benton, GRU’s Director of Accounting and Finance, gave the presentation, which is part of a series of presentations that will culminate in an August 9 meeting to set utility rates, and said the Budget Reduction Plan was a response to the Florida Auditor General’s findings that GRU debt levels are significantly higher than comparable municipal utilities and that no consistent methodology had been established for determining the amount of the annual transfer (now called the Government Services Contribution or GSC) from GRU to the City’s General Fund.

The City Commission, sitting as the General Policy Committee, voted on April 13 to approve a formula for determining the transfer amount and a plan to reduce GRU’s debt by about $315 million (30%) over the next 10 years. The plan will reduce the GSC from over $34 million in FY23 to about $17 million in FY24. The debt reduction plan also requires GRU to reduce its budget by about $2.8 million per year.

Benton said the reductions are “made more problematic” because over the past five fiscal years, GRU’s operations and maintenance budget has only increased an average of 0.45% per years, and staff has only increased by an average of .41% per year, most of which was driven by hiring the staff of the biomass plant when the City purchased the plant.

GRU proposed eliminating positions that are currently unfilled, which will reduce the budget by almost $2 million, and eliminating $1.4 million in non-labor expenses, for a total of $3.4 million.

Proposed budget will reduce proactive maintenance

After the presentation, Commission Bryan Eastman asked about $480,000 in proposed cuts to Contractual Services, and Brett Goodman, the Director of Water and Wastewater Treatment Operations, said they had tried to figure out where they could make cuts with “the least amount of pain” while making sure that none of the cuts would erode safety or sacrifice environmental or regulatory compliance. “Generally, I would say the Contractual Services cuts are where we’re taking a less proactive role with our maintenance. So… things that are essential, we’re going to continue to do. Things that are preferred, in the future, we’d like to be more proactive with, those are what we’re cutting.”

Goodman also said the $220,000 cut in spending on chemicals in the Wastewater budget came from “a significant market change in the chemicals we use… We’ve seen some of those prices start to taper off.”

Regarding maintenance, Goodman said, “We don’t want to cut things that are ultimately going to haunt us next year, but there are things we’re pushing off and deferring that we know are ultimately going to come back–we need to, you know, change this motor out or we need to do these–while they’re not essential now, they’re going to become–so for this budget year, we just pushed them into the future.”

Commissioner Casey Willits asked whether the changes would increase the likelihood of unplanned repairs, and Cunninham said, “It increases the risk of that, but we tried to identify areas where we didn’t see that being the reality… We are deferring a little bit of maintenance, but it’s a small portion… These are smaller reductions in areas that people in those areas, that operate those areas, that are managers, supervisors, develop the places where they can trim that.”

Mayor Harvey Ward asked about the $175,000 LEEP reduction, and Cunningham said GRU had modified the program to have more impact on individual homes over a wider range of incomes, so they increased the budget, “and this reduction is bringing it back down, but still not back to its historic level.” He added that GRU is in the second year of three years of American Rescue Plan Act funds that are being used for LEEP. Cunningham said they were hoping to do about 200 homes per year, and this cut will reduce that by about 23 homes per year. 

Ward estimates that eliminating paper bills could save almost a million a year

Ward also asked how many paper bills GRU still sends out, and Cunningham said about 75% of bills are still mailed (about 75,000); Cunningham said they’re using marketing and communications to try to get customers to convert to e-bills. Ward asked whether GRU had considered charging for paper bills, and Cunningham said they had considered both charging for paper bills and requiring new customers to opt in to a paper bill, “but we haven’t landed on a strategy yet, beyond marketing and communication, to get folks to convert.” He said that charging people for paper bills is “on the table.” Ward said, “If it costs a dollar per bill, that’s $900,000 per year… approaching a million dollars per year.”

Clemons’ bill adds uncertainty

Eastman was concerned about whether some things currently done by GRU would be within the powers of the upcoming governor-appointed Authority and said, “I worry about sponsorships, I worry about the LEEP program, various things that are not explicitly related to the management of the utility… Obviously this budget may have to change at some point, once that occurs.”

Willits said that the budget was more a response to guidance from the Joint Legislative Audit Committee (JLAC), rather than Clemons’ bill: “We would be doing this, anyways… JLAC already told us we have some issues and identified them, and that is what we’re working on. This is good due diligence… Those 20 positions or so probably could have helped GRU, could have lightened the work load, added their knowledge, and really helped, but this is what we’re tasked with.”

Ward said, “We can’t operate on assumptions about what may or may not happen… There are lots of different things that an Authority could move forward with or could not move forward with. We can’t let those things enter into our decision-making, honestly… Our job is to put this budget together within the constraints of… what the Joint Legislative Audit Committee has made very clear, they expect… But reducing $315 million worth of debt to the people of Gainesville is not a bad thing, anyway… It’s a painful process, but it’s a positive move.”

Ward read from a statement he had sent to Cunningham for a recent press release: “As Mayor and as an owner and customer of GRU, I know that it’s critically important that the lights stay on and the water flows where it’s supposed to, when it’s supposed to. All of that is non-negotiable, and I will continue to work hard to support the women and men who make sure that happens. While I have disagreements and concerns with the process of this bill, please make no mistake that the continued excellent delivery of services from our municipal utility is my priority.”