The Nome Joint Utility System board again pressed General Manager John Handeland on Thursday over years of overdue audits and a budget he promised to deliver in September.
Handeland told the board at its meeting on Sept. 22 that he would produce a budget by the end of that week. At the Nome Common Council meeting the following Monday, he said he was still “putting some final touches on it” and planned to prepare a 2027 budget alongside it. The utility board last approved a budget for fiscal year 2021.
Board member Larry Pederson said the lack of a budget makes it difficult to weigh in on new equipment purchases and other board requests. When he reminded Handeland of his promise to produce a budget, Handeland acknowledged it and said he had been sick. He said accounting consultant Travis Werba with Werba & Associates, CPA, LLC would help remotely the following week. Handeland gave no date for presenting a budget.
Board member Carl Emmons said BDO, the utility’s auditing firm, was still waiting for information it needed to finish the 2022 audit. He asked whether the utility should hire another firm.
“It seems like nothing's been done on the audits at all. Do we need to hire somebody else, a different outfit? I mean, at some point, this has just gotten ridiculous,” Emmons said.
Board Chair David Barron asked why the utility still owed auditors records supporting credit card charges. Handeland said the utility was working on it.
“We got to make it a priority,” Barron said.
Handeland said he was scheduled for surgery Friday and expected to work from home during his recovery. Emmons told him to delegate.
“But John, you don’t need to do it. You can hire somebody,” Emmons said. “That’s what managers do. You manage.”
Handeland told the council in April that he was reviewing a draft of the utility’s 2021 audit for publication. In July, he told KNOM the audit was “complete” and could be released as soon as August.
Handeland again described the audit as complete in September. Thursday’s board packet did not include the budget, and an included financial statement showing revenues and expenses through September had zeroes in a column dedicated to the 2026 budget.
Nome’s municipal code requires the utility manager to prepare an annual budget for board review before it goes to the council. It also requires the board to arrange an independent audit each year and make copies available to the public upon request.
On August 11, an email from KNOM to Handeland requesting a copy of the 2021 audit went unanswered. This week, KNOM submitted a public records request for the utility’s audits from 2020 to the current year. Nome City Manager Lee Smith said the city would need to consult its lawyer to determine whether it could fulfill the request, given the utility’s status as a separate component unit of the city.
Fuel financing draws scrutiny
The missing financial records came up at the Nome Common Council’s Oct. 13 meeting. Council member Scot Henderson asked Handeland how the utility secured financing for its annual diesel purchase. By resolution, the council authorized borrowing up to $8.6 million from Northrim Bank with an annual interest rate of 5.69%. The financing terms call for annual audits and require copies to be furnished to the lender upon request.
Handeland said he contacted two local banks without issuing a competitive request for proposals. He said Wells Fargo declined to take up the loan.
“Any idea why Wells Fargo said no?” Henderson inquired.
“Just because we didn't have all of the documentation and stuff that they would need to run it through their people that are in Minneapolis and San Francisco. I think that it was just it would have been a heck, a lot more work to try to get that with them,” Handeland responded.
“Lack of audited financials was obviously a factor,” Henderson said, cutting off Handeland.
Henderson, a former banker of 11 years, said competitive bidding could help secure a lower rate. He said he suspected the utility was paying more because it negotiated directly with one bank.
“This is one of these things that costs ratepayers money when we don’t have audited financials,” Henderson said.
At the Thursday meeting, Handeland said rate payers should expect the generator fuel surcharge on each month’s bill to more than double from $0.18 to about $0.40 per kilowatt hour. In August, Handeland estimated a more modest increase to $0.30.
What the utility’s books show
The utility's September financial report shows it recorded $63,268 in audit expenses in the first nine months of 2026, up from $9,600 over the same period last year. It recorded another $45,103 under a line for management and accounting consultants. Together, those charges accounted for about 87% of the increase in administrative expenses.
The report showed a margin of about $793,000 through September, down 22% from the same period last year. Water and sewer operations went from a reported margin of about $95,000 to a loss of about $53,000. NJUS Chief Financial Officer Chris Coffman said at the meeting that the utility had yet to record this year’s depreciation, an expense that reflects the use of equipment and infrastructure over time.
The September balance sheet showed about $324,000 in cash and demand deposits, down from $4.37 million at the start of the year. Coffman told the board Thursday that the utility now had about $1.2 million in the bank and owed a little more than $280,000 in unpaid bills, excluding the fuel purchase.
Near the end of the public meeting, Barron thanked utility staff and urged management to share the work.
“If you need help, you got to ask for help,” Barron said. “If you need certain things, you got to give other people tasks.”
The board then voted to go into a closed-doors executive session to discuss “personnel.” Barron confirmed to KNOM after the meeting that no action was taken during the executive session.
The utility board meets on the third Tuesday of each month, meaning its next scheduled meeting is Tuesday, Nov. 17.
