How much of a water, sewer and trash pickup rate increase will be enough?

Where did the bond reserve money go?

How soon can a sales tax election be called?

Those were among the questions left for McAlester city councilors to ponder after the Thursday night special city council meeting.

City councilors heard recommendations from Rick Smith of Municipal Finance Services, Inc. in Edmond that the city needs to raise water, sewer and sanitation service rates —and raise them fast.

Smith, who did some financial consulting work for the city on a contingency basis, told city councilors they don’t have a lot of time.

He recommended a 24 percent increase in the water, sewer and sanitation service rates because of looming bond debt service payments.

“These rate increases are the minimum that need to be established as soon as possible,” Smith said.

Then, Smith told the councilors that $1.840,000 in bond reserve funds that had been thought to be in the bank is no longer available.

Records show that a surety bond was substituted for the $1.840,000 cash reserve, which was then returned to the McAlester Public Works Authority, Smith said.

The revelation appeared to stun the city council, as well as just about everyone else in the council chambers.

After the meeting, City Manager Susan Monroe said she did not know what happened to the money after the transfer to the MPWA.

“We just found out about it,” said Monroe, who became city manager in July.

Smith also recommended that the councilors pass a resolution asking voters to approve a city sales tax increase. He didn’t recommend an amount, leaving that up to the councilors to decide.

Smith told the councilors because of a notice requirements, that the earliest the city could hold a sales tax election would be in January. Even if it passed, the tax would not become effective until April, 2006, and the city would not see any revenue from a sales tax increase until next June.

In addition, Smith told the council that because of past restructuring of bond indebtedness by the city and other legal restraints, it’s not feasible for the city to try and restructure the city’s bonds at this time.

Monroe asked the councilors to provide her with some input by today on the possible water, sewer and sanitation service increases, as well as a possible city sales tax increase. Monroe hopes to have the matters on the agenda for the next McAlester City Council meeting on Tuesday.

The council also heard from Harold King, who said the city needs a long-range plan and who spoke of his concern that the rate increases will not address future needs.

Monroe acknowledged that’s the case, but said the council must act quickly on the questions of rate hikes and a possible sales tax because of the pending bond service debts.

McAlester resident Vicki Brown asked the councilors not to place the problem on the backs of those who pay the water, sewer and sanitation service bills — many of whom cannot afford a rate increase, she said.

Joyce Carlson said many people are already paying water bills that seem too high.

After hearing from Smith, the council passed a measure agreeing to contract with Municipal Finance Services and attorney Allan A, Brooks. Smith agreed to work for expenses up to $2,500, because he said he wants to establish a long-term relationship with the city.

Before Smith spoke to the council, Monroe had told the city councilors that the city is cutting costs and is also reducing personnel through attrition, but those savings alone won’t be enough to get the city the revenue it needs.

The city has 236 full-time employees. They include 42 firefighters, 46 police officers and 148 non-uniformed workers.

Monroe said 13 jobs have remained unfulfilled through attrition after people have retired or resigned, recently.

“We’re already working at minimal staffing levels,” she said.

Contact James Beaty at jbeaty@mcalesternews.com.