by Terry Rogers
At a recent meeting, Milford City Council spent considerable time discussing the purchase of a replacement truck in the water department. The truck was included in the approved Capital Improvement Plan (CIP) which was approved several months ago.
“The vehicle is Public Works Unit W-8,” Mike Svaby, Director of Public Works said. “It is a 2011 Ford F450 that met the 10-year replacement cycle effective the latter part of 2021. When we put the expectation into the capital budget, it was an estimate and those prices now are revised, probably monthly, but at the time revised twice a year. We put in $52,000 going into the CIP submission when it originally hit the replacement schedule. But a recent update that’s valid through the end of March is that it’s $71,927. So, Public Works and finance staff worked together on funding sources and recommend that an additional $20,000 be supplemented to the purchase from water reserves.”
Councilman Andy Fulton questioned what the truck was used for and Svaby stated that it served multiple purposes, but primarily was used by the water department. It was heavier duty than a pickup and included a flatbed with a box that could haul heavy items.
“I know we had we had a funding request in the last meeting, I think it was from water reserves and the water reserves were pretty flat at that point, I believe,” Councilman Jason James said. Now if I have the wrong account, wrong reserve accounts, please correct me. So once again, do we have adequate reserves available in the water reserves, what additional funding can come from there? I know this is where we say it’s primarily used from but do we have adequate funding to support this from the water reserve?”
Finance Director Lou Vitola explained that Councilman James was correct in his recollection that, in January, he reported water reserves of only $120,000 and $110,000 was earmarked for engineering costs at the business campus. He stated that, in short, there was adequate funding in water reserves as the February report includes areas where reserves were freed up, indicating that there was now more than $200,000 in water reserves presently.
“So, what we’re doing is kind of the opposite of what you suggested rather than commit an expenditure from operating cash to be dumped into the reserves, we correctly parsed out the MCR, to show that there is more funding availability in the water from reserves,” Vitola said. “The only reason we like to use the reserves as the source of funding for those items is because the reserves are intended to be put away and invested to meet future capital needs. And we would need an operating budget amendment, I think, in addition to this or as part of this to make it happen in the reverse direction. And then, at the end of the day, even though water reserves were thin, they’re still at $200,000 uncommitted reserves. It was still the best place to make direct recommendation for the last $20,000 for the truck. Plus, we like to fund assets from the same funding source.”
Councilman James also questioned the invoice as the original budget included $52,000 for the truck, the printed invoice from Hertrich showed $62,927 and, handwritten on the bottom was “plus $9,000.” Svaby explained that when the initial amount was placed in the CIP, it was a previous budget cycle. When the time comes to replace the truck, his department reaches out to the dealership to get an actual estimate and, when it came in, it was at $62,927. However, because they have not ordered the truck yet, the cost continues to rise.
“It is an inflationary adjustment to the price of the vehicle,” Svaby said. “There was no additional equipment. It’s just a change in the price of the vehicle from when we got our first quote which I believe was in the late fall.”
Councilman James questioned why Hertrich did not provide a new invoice and Svaby stated that they usually call to get updated pricing once the original invoice is received. He explained that he could provide council with an updated invoice once the order was placed. Councilman James asked if there was still an issue with vehicle production even though COVID seemed to be loosening up and Svaby confirmed that this was the case.
“There is such a shortage of vehicles right now at every level, but it’s definitely the heavy-duty ones that, you know, if you are lucky to get your hands on them that’s great,” Councilman Todd Culotta said. “The dealers can put whatever markup they want, and they still sell very quickly.”
Councilman Fulton asked if once the order was placed for the truck, the cost would be locked in and Svaby confirmed that was true. Council approved the transfer of $20,000 from water reserves as well as the $71,927 cost of the truck unanimously.
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