A draft analysis of the Atlantic City Municipal Utilities Authority produced by Ernst & Young and obtained Tuesday by The Press calls for layoffs and increased water rates for commercial customers.
But the Don Guardian administration, which wants the MUA brought under the city, says that process wouldn’t result in job cuts, while residential water rates will remain close to current levels.
The analysis is identified as “a preliminary summary of the potential net cash flow improvement from considering the MUA as a City department rather than a stand-alone entity,” according to an associated introductory message. The document was emailed by an Ernst & Young staffer to the MUA’s executive offices in mid-June.
It presents $9.3 million in savings from a variety of changes to the authority, part of which would come from “a combination of attrition (retirements) that are not replaced, and additional headcount reductions.”
A 58 percent reduction in the cost of administrative salaries and a 53 percent reduction in the cost of salaries for operating personnel are listed. Those savings are both attributed to retirements and layoffs. However, a specific layoff number isn’t provided in the document.
Also noted is $30,000 in savings from the elimination of the authority’s board, which the document says would be unnecessary if the MUA is city-run.
A separate document referred to as the “2015 Headcount Review” is mentioned, but was not immediately available to The Press.
Guardian said Tuesday that he hadn’t seen the draft analysis but was briefed on it. He said he asked for the savings from layoffs to be removed from the calculation, resulting in about $6 million in reduced expenses.
The mayor says bringing the MUA under the city would mean those savings could be turned into a revenue source.
In a statement released Monday, Guardian said he intends “to honor all collective bargaining agreements of the current employees and executive director.”
He repeated that Tuesday, adding that no MUA employees would lose their job if the authority becomes a city-run entity.
Regarding water rates, the draft document notes that the MUA charges 40 percent less, on average, than other water utilities in the county.
About $3.5 million in additional revenue could be“achieved through rate increases to customers,” it states.
The document adds that those changes “could be a different rate of increase depending on the type of customer — e.g. reseller, large commercial, business, etc.,” and the goal would be to keep rates lower than most other utilities.
But Guardian said Tuesday that the city intends for residential water rates to remain the same. Commercial rates, such as those paid by casinos, would likely increase, he said, as would the prices paid by off-island purchasers.
Chris Filiciello, Guardian’s chief of staff, qualified that Wednesday, saying the mayor “wants to ensure the rates for Atlantic City residents stay reasonable.”
A public meeting on the authority’s future is scheduled for 6 p.m. Tuesday in City Hall.
The Atlantic City Council must vote to dissolve the authority, which is independent from the city, before it can become a municipal utility. In early May, the council unanimously voted down dissolving the authority.
Council President Frank M. Gilliam has expressed support for bringing the MUA under the city, though he said he hadn’t seen the draft study and declined to comment.
However, Councilman Marty Small, who called for the vote that opposed dissolution, said Wednesday he doesn’t trust the administration’s comments on the MUA and still opposes changing its structure.
“They do an oustanding job, so I would leave well enough alone,” Small said of the authority. “As leaders in this city, we need to step up and take a stand and keep something. Everything is being taken with little resistance.”
G. Bruce Ward, who directs the MUA, didn’t return a request for comment Wednesday.
Since it was announced in April, the study process evaluating the MUA’s ability to generate new municipal revenue has not been public, a decision Guardian attributed Tuesday to Emergency Manager Kevin Lavin.
Filiciello said the administration had not recieved an MUA assessments from Ernst & Young and couldn’t comment on what information council has received from the consultants.
“There have been and will continue to be discussions with council prior to next week’s open public forum and a continued dialogue afterwards,” Filiciello said.
The draft document notes that it draws on work done by Ford-Scott and Associates accountant Ken Moore, who conducts Atlantic City’s audits.
It also states that the findings were provided to Lavin, “who is supportive of this effort.”
Bill Nowling, Lavin’s spokesman, didn’t comment on why the MUA study process hasn’t been open. Regarding the draft document, he said that “As a general rule, the (emergency manager) comments when work product is completed and presented in final form.”
“Draft documents are just that: a draft,” Nowling said.