PORT RICHEY — State officials are once again raising red flags over the city's finances, finding Port Richey may be in a state of financial emergency.
The governor's Office of the Chief Inspector General sent a March 1 notice saying the city had a net deficit of $931,742 in its unreserved fund balance and unrestricted net assets for the 2008-09 fiscal year, which meets the legal criteria for possibly declaring a financial state of emergency.
It is the result of continued efforts to turn around a utilities department that the city acknowledged was hemorrhaging both water and money the last time the state declared a possible financial emergency in Port Richey after the 2007-08 fiscal year.
City finance director Pam Ziegler told City Council members about the state's inquiries at Tuesday's meeting, a week after receiving the notice. She told the Times the matter is a "continuation" of problems facing the city's utilities fund.
"We knew this was coming," Ziegler said.
The state's process for flagging financial problems in cities and counties is somewhat muddled, as reviews are a year behind.
In March 2010, Port Richey received word that the governor's office might declare the city in a state of financial emergency based on an audit of 2007-08 financial records, which showed an $896,110 deficit in unreserved fund balance and unrestricted net assets. After the governor's office issues such a declaration, the city must provide reasons for the deficit and an outline of solutions.
Ziegler told the state at that time that "the city has only enacted three water and two wastewater utility rate increases over the past 21 years, which had not allowed the city's public utilities department to keep up with the costs to support treatment and/or maintain the city's utility infrastructure."
The plan for solving the problems — including repairing leaks on water mains, certification of employees, and equipment upgrades — satisfied the state. The warnings of a possible state of emergency were lifted in November 2010 — only to be reinstated four months later based on a review of the 2008-09 fiscal year.
Officials with Gov. Rick Scott's office said they expect Ziegler in the coming weeks to provide them with reasons and solutions for the deficits.
"A determination as to whether or not the city 'needs state assistance' and qualifies as being in a 'state of financial emergency' will be made at that time," Scott's spokeswoman Amy Graham said in an e-mail.
This isn't the only financial blow hitting the city, which could be on the hook for a $90,000 payout to fired city manager Ellen Posivach.
City Council member Nancy Britton said the city is "bleeding money" — and that was before she learned of the emergency declaration.
"It was news to me," she said after Tuesday's meeting. "We need to take care of it."