|The city adopted a balanced and realistic FY12 budget by non-code ordinance on May 31, 2011. Separate sections for water, sewer, and garbage services are included in the overall budget. Revenues and expenses are listed with their respective service. The FY12 budget projects an increase in revenue from water utility user fees of $7,000 when compared to FY11 figures. The FY12 budget also shows a cut in certain utility-related costs.
The current monthly water utility user fees of $20 for residential customers and $30 for commercial customers do not produce sufficient income to cover utility operating expenses or repair and replacement costs. This rate structure originates from a financial arrangement made when the city acquired the piped water system. In 2003, Kake Tribal Inc. sold the water system to the City of Pelican and transferred the Certificate of Public Convenience and Necessity. As part of the transfer, the city agreed to be economically regulated by the Regulatory Commission of Alaska (RCA) until such time that the Pelican Seafoods processing plant had ceased operations for twenty-four consecutive months. Pelican Seafoods has now been out of operation for the twenty-four months cited in the agreement and the city petitioned the RCA to have the regulation requirement lifted. On August 4, 2010, the RCA granted the City of Pelican exemption from further economic regulation. With those regulations now lifted, RUBA staff will be able to assist the utility in addressing its utility fee structure should the city choose do so.
Until then, funds from other sources, such as the city's general fund, are necessary to subsidize operating expenses and any savings are used for unexpected repairs. The firm Altman, Rogers and Co. performs an audit for the city annually. In order for the city to monitor its financial standing, the city council is provided with monthly financial reports that include a profit and loss statement and a balance sheet. A budget vs. actual profit and loss is not currently included. Accumulated errors in the city's QuickBooks accounting file in previous months has meant that those financial reports do not necessarily reflect the exact financial status of the city. The balance sheet, for example, understates current assets while the current liabilities may be overstated. The city clerk/treasurer is aware of the need to improve the accuracy and readability of financial reports, and will be in communication with RUBA staff for feedback. A QuickBooks contractor visited the community in April to help clear up these errors and to create a new QuickBooks account for the city. While the city clerk and assistant clerk have made significant progress in organizing the old and new acocunting files, further efforts to reorganize the city's finances will be necessary because the most recent set of financial documents still do not match the city's adopted budget. Water utility expenses and revenues are not adequately listed on the financial report, so the state of the utility's financial sustainability cannot be determined by the financial reports in their current state. The utility clerk has agreed with RUBA staff's recommendation to include detailed water and utility expenses and revenues on the profit and loss statement. The utility clerk will also include a profit and loss budget vs. actual statement in monthly financial reports in order for the utility's governing body to gain a clear understanding of the utility's financial situation.
The community receives fuel shipments from Kake Tribal Fuel on a year-round basis. The fuel is stored at a bulk fuel storage facility owned by Pelican Seafoods, a subdivision of Kake Tribal Corporation. A sufficient level of fuel reserves is maintained at these facilities in order to accommodate the community's needs and adequate funds have been allocated in the city budget to purchase additional fuel as necessary. |