An emergency work session of the Nome Joint Utility Board was called to order last week, to discuss the utility’s finances. It would appear Nome Joint Utility System (NJUS) has a cash flow problem.
For years, NJUS has relied on a revolving line of credit with Wells Fargo bank. Typically, the utility system borrows from the bank to cover ongoing construction costs, while awaiting reimbursement from a variety of grant sources.
A wrench was thrown into that financial reshuffling process last week, when Wells Fargo refused to extend a new line of credit to the utility — at least, until NJUS can pay off its existing line of credit with the bank, which expired in 2013.
This leaves the utility system with bills to pay, and no cash to pay them (at least while it waits for grant reimbursements). So the board met Wednesday to ask city council for a line of credit.
Nome city manager Josie Bahnke also attended the session, and addressed the board after a motion to request 2.2 million dollars in “interim” funds from the city was approved.
She said city council would financially support the utility, but urged the board to take seriously their commitment to repay borrowed money — emphasizing the fact that city council doesn’t have cash to spare.
“This 2.2 million is coming from our city savings accounts that have been designated for our employees retirement system, and for our self-insurance fund,” she said, explaining the money is meant for city use in an emergency — not as a loan.
Bahnke said she is disappointed by the financial situation that led to this request.
“This is not where we want to be. It makes me sad; it makes me scared. So I hope the utility board isn’t just asking for this, but is also willing to make the really tough decisions to get your finances back in order,” she said.
Those “tough decisions” likely include cutting expenses at the utility — and more direct involvement from city finance director Julie Liew.
Currently, the Nome city council and utility board operate under separate financial management — with utility manager John Handeland stepping in as Chief Financial Officer amid accounting staff shortages. But Liew said it could be time for that separation to change.
“Maybe should we consider consolidating the accounting system, between NJUS and the city, for us to actually have a direct oversight on looking at the books and just providing a check and balance in that regard,” she said Wednesday.
While the terms of any credit agreement have yet to be solidified, Liew said city oversight of utility spending may be a stipulation. With details pending, city council members approved a line of credit to the Nome Joint Utility System on Wednesday, in an emergency work session of their own.
