On Monday, the Lanett Council reviewed the final audit for the last fiscal year conducted by the Phillip Morgan Company, P.C. The audit provided a realistic view of the city’s financial status. Unfortunately, the findings revealed a significant water loss related to the city’s water system. Specifically, the audit indicated that the city lost an estimated 70% of water, which translates to about $700,000 in losses over the course of a year.
“This is a serious issue we have been observing in our findings for several months,” a representative from Phillip Morgan Company P.C. stated. “According to our analysis, this is a real financial loss for the city. To be fair, all water systems are susceptible to some degree of loss, but the percentage we are experiencing here is exceptionally high. I urge the city to take immediate action to identify the cause of the water loss and implement improvements. Although water loss is common, the current rate is alarming and has not improved in recent years.”
Richard “Bull” Chapman, the Superintendent of Water and Wastewater for the City of Lanett, addressed the council regarding the water loss and assured them that they are actively working to determine the source of the issue.
Councilwoman Kim Roberts raised a pressing question: “The water loss comes after the city invested in new water meters, which will cost approximately $170,000 annually for the next seven years. How can we sustain this kind of loss?”
In response, the representative from Phillip Morgan Company P.C. said, “You are currently spending more to purchase water than you are selling.”
He further explained, “Essentially, the city’s water system must be supported financially. The previous meters were faulty, leading to underreporting of water usage. The new meters are indicating a much higher level of water consumption than the city anticipated. Moreover, the city was required to make a catch-up payment for that year based on the new readings. The installation of the new meters revealed that the city’s actual water use was significantly greater than previously thought, and as a result, costs have surged.”
To summarize, the city is buying more water than it is selling, which in itself contributes to a financial loss, according to the auditor’s findings.
Another concern highlighted in the audit was related to electrical power loss. “Last year, we lost our fourth-largest paying customer, who contributed $94,000 annually. Additionally, we lost 99 electrical customers in one year. How do we recover from this?” Roberts asked.
She emphasized that the council must address not only water loss but also electrical revenue loss.
Lanett Mayor Jamie Heard spoke optimistically about the audit, stating, “We hope to attract businesses to the Cherry Valley Shopping Center. We are currently in negotiations with a potential tenant.”
He also mentioned that a tax abatement for a restaurant will expire next year, which is expected to generate an additional $20,000 in sales tax revenue for the city.
In light of the current challenges, Councilwoman Roberts expressed her concerns. “Given the losses in both water and electricity, how do we cover salaries when we are facing such significant financial losses?”
The auditor responded, “You have adequate revenues to cover salaries, but currently, it is at break-even. This year, besides capital grants, it has been a break-even year. So, to put it simply, barely.”
