Why is Claxton’s natural gas line a liability?

The City of Claxton has a beautiful new $1.2 million City Hall courtesy of years of reserve accrual from the natural gas line. The line has been a serious asset for the city for many years bringing in well over several million annually until 2012 when it dropped to just below the $2 million mark.

Some expenses come along with the use and maintenance of the gas line, but in recent years, the City has operated in the red on the natural gas fund and in FY 2014, a mere $813 was put returned to fund at the end of the year despite grossing over $655,000.  So what is it that is costing the City of Claxton so much money in maintenance and should the people of Claxton be concerned?

()

Data from City of Claxton, Chart: AllOnGeorgia

Officials from the city blame the lower natural gas rates and the notion that fewer people use natural gas in Claxton. If those two things are indeed true, should the City attempt to cut expenses somewhere?

Over a three year period, the following expenses increased considerably:

• Salaries and wages (and therefore payroll taxes and employee benefits)
• Insurance expenses increased
• Contractual services went up 1.5x from the FY 2011 amount, though the breakdown of what contractual expenses entailed was not provided in the annual audits
• Day to day operating expenses have more than doubled

Also not disclosed in the audit: “bad debts.”

If Claxton is interested in rebuilding the reserves to the level prior to the construction of the new city hall, serious consideration needs to be given to the root of the problem. How does the City reinstate the natural gas line as an asset instead of a liability?