The Hernando Commission correctly pulled the plug on the misguided and shortsighted scheme of selling one its most valuable assets — the county water and sewer system.
With no public comment, commissioners last week declined to research further the notion of divesting itself of the utility. That suggestion originally came in June from Commissioner David Russell and was one of two utility-related schemes the county considered to ease future budget crunches. Neither came to fruition as the commission quickly retreated from the other proposal as well — balancing its general fund budget with a newly created, but ill-defined "return on investment surcharge'' in its utility department.
Russell, however, eyed the water and sewer system because its balance sheet showed $212 million in assets with a $63 million debt. A sale could have allowed the commission an infusion of cash that he wanted to use to subsidize customers' rates to sidestep increases planned for 2014 and beyond; and supplement the county's general fund that is facing a nearly $10 million projected shortfall next year.
The long-term solvency of the system came into question after commissioners decided three years ago to keep rates artificially low. That maneuver came as the county embarked on a $150 million renovation including consolidating smaller sewage treatment sites into bigger, regional plants. The commission's lack of political will was just one of the problems. A federal grant also failed to materialize and few new customers joined the system because of the dismal construction activity in the county.
The investment community responded five months ago by lowering the county's bond rating, which could translate to higher future costs to the public via higher interest rates for county borrowing.
But, selling the utility smacked of desperation and the commission finally recognized it. A county truly interested in the long-term solvency of a prized asset should simply charge market rates for the water and sewer service and allow the customers to properly finance its operations.
Give Russell credit for at least floating an unorthodox idea. Some of his fellow commissioners, Jim Adkins, in particular, simply call for spending and tax cuts and let others worry about the details.
These continued budget gimmicks that have included raiding land-buying trusts, dipping into reserve accounts and hanging for-sale signs on public assets are indicative of failing leadership that does not recognize the need for a balanced budget. County revenue should match its expenses.