NEW ORLEANS (WVUE) -Sewerage and Water Board executives revealed Wednesday that they are facing a financial crisis, reportedly with no money for the drainage system.
Chief Financial Officer Yvette Downs gave S&WB staff the update at a meeting.
“That makes it difficult to make payments for operations and maintenance that deal with drainage. It definitely makes it difficult on capital side to make drainage payments,” Downs said.
She said they’ll continue to monitor those reserves, but it means some needed projects and day-to-day operations could go without upgrades and attention. A spokesperson for the S&WB said they’ve delayed advertising and bidding for three projects at an estimated cost of $19 million.
Downs said they expect with some pending federal funds that they’ll be able to replenish those reserves, but that’s not an immediate fix. Erick Valentine is a professor of accounting at Tulane University. He said while it may be surprising the public utility has reported zero cash on hand for the drainage system, it’s not necessarily an emergency yet.
“Over the long term it is quite dangerous," Valentine said. "Most business have a fluctuation of cash flow over time. There are debt covenants that creditors require that put checks and balances on cash flow requirements.”
He says in the months to come, it’s important for the Sewerage and Water Board to fix what it can. If it’s not fixed within a year, that could mean trouble as borrowing rates could suffer the longer they go without cash.
“I think the borrowing will allow them to maintain continuity on the service. I think over the long term it has to be corrected, and there’s no way around it,” said Valentine.
The S&WB has said the cash situation won’t affect daily operations of the drainage, water or sewer system. Downs told staff that help is coming in the future in the form of federal funds and programs. A spokesperson said they’re waiting on $23.6 million in FEMA reimbursement payments, but in the days to come, it will be tight.
“Some relief is on the way, but we certainly, as we’ll be talking shortly and strategizing, we need all of our partners to be at the table with us to identify additional capital sources of funding,” said Downs.
Those projects on hold include replacing a roof on the Carrollton water plant engineering building, updates to the water plant’s chemical storage and feed building, and the demolition of abandoned basins.