PORT RICHEY — City Manager Richard Reade knew money was tight. Rather than recommend a tax increase, he cut costs.
But one day after the City Council voted to keep its tax rate at 3.9 mills for the second consecutive year, state auditors said the city qualifies as being in a state of financial emergency.
The reason? A major financial hit the city has taken in its utility fund after discovering it was losing millions of gallons of water.
"It wasn't a surprise," Reade said Monday. "We knew we had problems."
In a letter sent Friday to city officials, accountants Judson B. Baggett and John E. Henson said the city's net deficit of $147,115 at the end of fiscal year 2007 qualified as an emergency. Beau Brooks, senior auditor at the state Auditor General's office in Tallahassee, said the city's financial status now goes to the governor's office for review, but he downplayed its significance.
"We get tons of these," Brooks said. "A city could have issues from a bond, and it reverses itself next year. It's a common thing we report."
The Times was unable to contact representatives from the governor's office who could speak about the next steps for Port Richey as it tries to calm its financial situation. The City Council is expected to discuss it at tonight's regular meeting, beginning at 7:30 at City Hall, 6333 Ridge Road.
"My initial reaction is that it was what I expected," said Phil Abts, a council member. "With the way the city was run prior to Richard Reade, I can see how we can be in a state of financial emergency."
The city lost millions of gallons of water over the past three years, and officials say that is the main culprit. In December, the city was losing about 11-million gallons of water each month because of a combination of factors, including a large water main break under the Pithlachascotee River and an open valve at the city's water plant that should have been closed, said Pat Stewart, utilities supervisor. The city initiated repairs to fix the problems.
The city also used to purchase water from neighboring New Port Richey, but lost large portions of that water because of old pipes and leaks. Now the city, with a budget of $10.6-million, is losing only about 32,000 gallons each month, Reade said.
Mayor Richard Rober said he wasn't surprised to hear the news. "It's not making me nervous or uncomfortable," Rober said, "but it is something we need to deal with."
Camille C. Spencer can be reached at firstname.lastname@example.org or (727) 869-6229.