Last spring, DeKalb’s city manager was pushing for water rate and fee increases of 3.8% for infrastructure projects such as water main replacement. In the city council agenda for April 28, 2025, he wrote, “It should be noted that the Water Fund is an enterprise fund that should cover its operating and capital expenses from its water sales and water service fees.” Council approved the increases at least partly based on this reasoning, and residents can expect to see these hikes reflected in their next city utility bills.
What’s not mentioned in that April agenda is how much of your water bill payment goes to prop up general operations. Hint: it’s a big chunk. But General Fund monies come mostly from taxes, not user fees, so this looks a lot like a sneaky way to raise taxes while avoiding political fallout — a strategy that should be mentioned, monitored, and minimized where possible.
Meanwhile, here’s my rough math for 2025. DeKalb’s Water Fund budget projects $2.7 million in expenditures in the Personnel category. Compensation for staff directly involved in providing water services come to $1.4 million. That leaves $1.3 million going to city employees whose positions are named only in General Fund (GF) departmental budgets and/or org charts.
Add in the $279,500 annual Water transfer to GF as payment in lieu of taxes (PILOT) and that means the total GF dependency on Water exceeds $1.5 million – more than 23% of the $6.4 million in water sales and service fees the city expects to collect in 2025.
DeKalb’s financial policy states that the annual budget “should effectively communicate meaningful and understandable information to the City residents, City Council, City staff, and other readers.” But there’s no way a person can look at our budget and discern that more than 50 city employees are each getting paid partially by GF and partially by Water.
Likewise, there’s no guidance for public understanding that most departmental and divisional budgets in the GF (e.g., Finance, IT, Streets, etc.) understate their actual personnel costs by 10%, 25% or even more because of compensation charged directly and non-transparently to the Water Fund.
City was open about the dependency until its size became embarrassing
The first DeKalb budgets I paid attention to were fiscal years 2007-2008. GF dependency on Water Fund at that time was $500,000 per year, and easy to see in the budgets: Water showed a transfer out to GF, and GF showed a transfer in from Water. Simple.
Because you couldn’t miss the transfers in the draft budgets, people would bring them up during budget meetings. At times intentions were formed to reduce dependency, but the Great Recession got in the way, as did the Great Administrator Hiring Spree after that. The dependency grew. For fiscal 2015, the transfer had swollen to $702,500. A year later, the budget included only a relatively small PILOT transfer with most of the dependency going underground.
Consequences of the ongoing Great First Responder Hiring Spree are set to drop any time now, so we really need to keep an eye on this use of the Water Fund and start considering where to draw a line.
What should happen
City of DeKalb has had a longstanding, intractable dependency on its Water Fund for general operations. It’s not illegal, and it’s not going away anytime soon.
That said, the lengths the city gone to in hiding the extent of the dependency, including distorting budgets and avoiding straight answers to questions, is jaw-droppingly dysfunctional. DeKalb residents deserve to know how the city is spending its water bill dollars. Suggestions to get there:
— Promote transparency in budgets. In order to return to “meaningful and understandable” budgets, the city should take steps to reflect the dependency in its spending plans. Returning to the practice of making full, direct transfers from Water to GF is the most obvious and simplest way to restore transparency and the accuracy of departmental budgets.
— Include dependency info in water service pricing discussions. The dependency also should be a topic when it’s time to consider hikes to water rates and metering fees. Unfortunately, DeKalb put increases on “auto pilot” in 2021 by passing an ordinance allowing the head of Utilities to raise the charges by CPI or 3.5% without explicit city council approval. Council should repeal this provision and hold public discussion every year that it wants increases of any size. Additionally, it should be a policy to hold the normal two readings, not to waive the second reading as it did this year in approving the 3.8% hikes.
— Comment on these issues. Planning for the 2026 budget year starts next month. There’s no better time to contact your elected representative(s) on the council and/or put a meeting on your calendar if you have an opinion on Water Fund dependency and its intertwined nontransparency issues.
Methodology notes
To track the nontransparent Water Fund spending on compensation, I used three city documents:
- The latest Total Compensation Report for all city employees;
- The 2025 annual budget; and
- A budget allocation report.
Although I used the Total Compensation Report without the allocation report to get the aforementioned $1.4 million figure for the personnel who directly produce and deliver the product, I discovered that Water Division employees actually don’t get paid 100% out of the Water Fund. The split is 40% GF and 60% Water. Why? I can only speculate, but here’s what makes sense to me: the point is to maximize the number of positions using Water to squeeze the greatest amount of assistance from it.
Exhibit A for this hypothesis is my estimate that this year the Water Fund rate and fee hikes will help cover the raises of 55 people while GF departmental budgets look frugal as heck.
I’ve not changed my opinion — Water Fund definitely is looking slushy, like a TIF fund back in the day.