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LCUB chief says, ‘No layoffs, no rate hike’

Lenoir City Utilities Board has said it won’t be laying off employees in the face of possible debt difficulties — but does that leave ratepayers with the tab?

LCUB general manager Shannon Littleton said no.

“No rate increases are anticipated in any department” in the next year, he said.

Littleton also rejected the characterization in recent news reports that LCUB is in financial distress.

“That’s not to say that we’re not still facing a tremendous amount of debt in [the] water and wastewater [departments], but I would not say that LCUB is in financial distress,” Littleton said.

LCUB has amassed that “tremendous” debt largely from building its new wastewater treatment plant to comply with state regulations. And while Littleton said that LCUB could handle that debt without employee layoffs or a rate hike, State Comptroller Justin Wilson did not agree.

“Based on projected numbers for the system’s operating revenues and expenses, the system will not generate a sufficient cash flow to pay both operating expenses and the principal and interest on long term debt,” he said in a letter dated Jan. 31.

“The city has limited options to choose from. The first is an increase in the user rates; the second is a reduction in operating expenses; and the third is a combination thereof ... I noted that the city provide[s] a very attractive set of benefits, both salary and fringe, to its employees, which appears to be above the level provided by most local governments in the state,” Wilson said.

Littleton said there won’t be any cutbacks at LCUB this year since the utility renewed its contract with the International Brotherhood of Electrical Workers in March. The contract means there won’t be any layoffs this year, nor will there be any raises or changes in benefits.

“Everything is staying status quo,” Littleton said, until LCUB could negotiate a new memorandum of understanding with IBEW next year.

The State Comptroller’s letter also outlines a suggestion apparently made by LCUB staff and Lenoir City councilmen to shift funds from one LCUB department to another to help cover the debt costs.

In his letter, Wilson said transferring funds that way is illegal.

Littleton said that wasn’t the exact conversation; instead, he said LCUB staff and board members suggested sharing funds between the gas, water and wastewater departments because they have the same management and employees and use the same equipment.

“We were trying to make that argument to the comptroller that we were different; that we’re really just one organization with water, gas and wastewater.

“But he did not buy that argument, obviously; and he found that it was contrary to law. And we took that and moved on,” Littleton said.

All in all, that means no major changes at LCUB this year. But that won’t mean that Littleton and the board won’t be looking at changes to make next year.

“Everything is staying status quo until the Board is able to work with the union’s representative to discuss what can or what shouldn’t be dealt with in a new memorandum of understanding. We’re going to take this year to try to work through those issues.

“The changes that are going to take place in the memorandum of understanding, and what the Board is going to deal with in the future and what I’m going to deal with, is just going to make a better LCUB,” he said.


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