Thursday, April 26 , 2018, 1:46 pm | Fair 59º

 
 
 
 
Advice

Ron Fink: Lompoc Needs to Be Far More Aggressive at Recovering Lost Enterprise Fund Revenues

The people of Lompoc were both surprised and highly irritated last Tuesday when they learned that the city had either forgiven or written off millions of dollars in utility fees since 2008.

A couple of years ago, then-Councilman Bob Lingl and Councilman Dirk Starbuck approached the former city administrator and asked that an outside auditor be hired to look at how the city’s fees are collected, including collection of utility bills. Both believed the city was coming up short on collecting unpaid utility charges.

The city administrator at the time failed to act on the suggestion, but when Patrick Wiemiller was hired as the new city administrator he agreed and hired on independent auditor. Since the consultant began auditing, she has identified substantially more in lost revenue than the cost of her service.

To establish some sort of context, we need to know how things were done under previous administrations. Basically, it was for the council to ask few if any meaningful questions and for a seemingly inept staff, bolstered by lethargic senior level management, to avoid performing their basic duty of due diligence.

It seemed that their default solution to declining or lost revenue was simply to ask for higher rates and larger budgets, without exercising the professionalism and competence to examine current practices or how to improve operations before automatically reaching into ratepayers' pockets for the easy fix.

How could this happen? According to the auditor's presentation on March 3, Lompoc has contracted out collections with an outside collections agency or credit bureau since 1991.

To demonstrate the severity of the issue, let’s examine the 2013 records. The auditor found that 998 accounts owed $406,967 and that the collection agency recovered payment from only 29 of those accounts, amounting to $63,625. That means that the city left $343,000 on the table in 2013. In 2014, they left another $280,000 uncollected. The total lost in the last seven years was $2,454,195.

For their efforts, the collection agency gets 60 percent of all it collects, so you have to wonder why the collection agency would allow nearly $1.5 million of its cut to slip away in just the last seven years. And its performance has been less than stellar. It dropped from 44 percent debt recovered in 2000 to only 18.6 percent in 2014.

As the auditor said, the agency must not be very good at what it does.

None of this information about uncollected utility debt was made public during the five-year schedule of rate increases the council approved in 2013. I don’t know how receptive either the council members or the public would have been had they known that in the four years prior to the recommended rate increases that the city didn’t aggressively pursue collection of nearly $1.6 million in bad debt.

Since the information wasn't made public, there was no discussion of the impact these losses might have had on the need to raise rates for five straight years.

What happened, and how did we get here?

One reason is that the city’s utility records are still maintained manually and they are only checked by a clerk with a calculator five times a year! Simple and effective electronic data systems such as Microsoft Excel have existed for many years, but Lompoc is still using labor-intensive 3-inch-by-5-inch cards to maintain the information.

This is a result of a serious lack of professionalism that is left over from several decades of apathetic oversight by city councils and a lack of overall competence by city management. For example, the auditor found that “only half the statistics for 2013 (were) available, as information was not saved more than six months after sending to collections.” Could that mean that the losses in 2013 may have been even higher?

Fortunately, this began turning around in 2008 when council members Lingl and Cecelia Martner were elected and weren’t afraid to ask hard questions of city management. Then in 2014, a new city administrator, Wiemiller, was hired, bringing a new level of professionalism to City Hall. There is still a long way to go, and I am sure that the upcoming budget discussions will be an indicator of how much recordkeeping modernization needs to occur in the finance and utility departments.

Apparently the city isn’t charging for all of the waste containers that are out on the street either. How many? Well, it could be a substantial number. We’ll have to wait until the audit is complete, but I am told that in one small residential area surveyed dozens of containers weren’t even on the inventory — thus no one was paying for them.

The current City Council is far more engaged and vigilant than their predecessors in the early 2000s. Wiemiller didn’t rise through the good old boy atmosphere at City Hall and he inherited a fiscal mess. He is very competent and is working hard to straighten it out.

One thing is certain: The city needs to become far more aggressive at recovering lost enterprise fund revenues and fixing an archaic accounting system.

— Ron Fink, a Lompoc resident since 1975, is retired from the aerospace industry and has been active with Lompoc municipal government commissions and committee since 1992, including 12 years on the Lompoc Planning Commission. He is also a voting member of the Santa Barbara County Taxpayers Association. Contact him at [email protected]. The opinions expressed are his own.

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