(The Center Square) – Facing a six-figure liability for unpaid bills following years of financial issues, the future of the town of Simmesport is “a growing concern,” according to a recent audit.
A contracted audit for fiscal year 2021 published by the Louisiana Legislative Auditor last week highlights Simmesport’s mounting financial issues, primarily tied to the town’s water and sewer utility systems and lack of proper oversight.
The report points to a deficit fund balance of $93,458 at the end of the fiscal year and past due bills totaling nearly $600,000.
“As of the date of this audit report, the Town of Simmesport, Louisiana was delinquent in paying bills for services the town had consumed for a total liability of $596,777. Of this amount approximately $232,728 was reported in the current financial statements between the General and Water and Sewer fund for the year ended June, 30 2021,” auditors wrote.
“The remaining balance of $364,049 was incurred from July 1, 2021 through May 12, 2023, and is the responsibility of both the major funds listed previously.”
The audit points to a 20-year master utility service agreement with Sustainability Partners, LLC to provide upgrades and ongoing maintenance to the town’s water and sewer utility system that resulted in a lump sum payment to the town of $625,000 for the “exclusive usage right to full control over the sewer system in the event the Town defaults on its monthly utility service payments.”
“The usage right fee is recorded as a deferred inflow of resources in the water and sewer fund at June 30, 2021 and will be recognized as income over the twenty-year life of the master utility service agreement,” according to the report.
With the town’s growing liabilities, and the precarious status of its water system, “the Town’s inability to generate additional revenue and transfer excess funds from the Water and Sewer funds to satisfy the liability create an uncertainty about the Town’s ability to continue as a growing concern,” auditors wrote.
Those issues are compounded by others, including several that have plagued the town for years. They include inadequate segregation of accounting functions, inaccurate utility accounts receivables and customer deposits, utility customer account adjustments without proper documentation, no paper trail for traffic tickets, a general lack of internal controls to process and monitor financial transactions, and failure to collect on delinquent property taxes, among others.
“The Town of Simmesport should implement policies and procedures to better monitor current available resources and begin to adjust current spending practices,” auditors wrote. “In addition, the Town should develop a plan to resolve the deficit for future years.”
Town officials laid out actions they’re taking to fix the issues, as well as cost-cutting measures in the works to correct course.
“The Town of Simmesport has implemented a hiring freeze and severely curbed overtime,” according to management’s corrective action plan. “In addition, the Mayor must approve all spending before it occurs.
“Several employees have terminated their employment since FY20-21 and have not been replaced. Utility cutoffs have been strictly enforced resulting in increased revenue,” the plan read. “Also, the American Recovery Act funds that the town received were never amended into the budget resulting in the appearance of overspending. The town is resolved to amend its budget to reflect any future sudden changes in revenue.”
