At a tense meeting Tuesday, the Madison Water Utility Board voted against renewing a contract with the utility’s general manager as it works to address financial concerns.
Tom Heikkinen, who was hired in 2008, was up for a five-year term renewal. His position comes with a $151,011 annual salary.
The board’s 3-2 vote followed a referral from Madison’s City Council Aug. 14 to give the board an opportunity to consider adding conditions to Heikkinen's contract. It also comes after the Madison Water Utility discovered a $6 million deficit, stemming from a decline in revenues from the budgeted $45.6 million to about $38.1 million.
The utility is looking to sell eight unused properties, obtain a loan from the city, delay capital projects and reduce operational spending to address cash flow.
To address concerns regarding the financial state of the utility, Mayor Paul Soglin favored renewing Heikkinen's contract with the following directives:
- Finalize Public Service Commission rate case and issue debt by Dec. 31.
- Finalize a schedule for the sale of surplus property with the Office of Real Estate Services by Dec. 31.
- Adoption by the City Council of a resolution formalizing a loan to the Water Utility from the city’s general fund.
- Report quarterly to the City Council, Water Utility Board and Finance Committee on monthly cash balances, annual cash forecasts and long-range financial modeling, including a consistent and timely schedule for rate increases.
Board Chair Lauren Cnare voted in favor of approving the contract, expressing confidence in the mayor’s expectations.
“I feel very strongly that the feedback that we have provided as a board and the addendum to the contract that has come from the mayor is the right amount of pressure to put on to right the financial ship,” Cnare said.
However, Ald. David Ahrens, District 15, argued for greater accountability. He voted against the contract and proposed earlier in the meeting to impose a two-year probationary period with a salary freeze during the duration of that timeframe.
He said a function of the board is to check the performance of management.
“This is not a technical matter,” Ahrens said. “This is a matter of stewardship, and it’s a matter of trust.”
Exchanging heated words with Heikkinen, Ahrens also alleged the general manager did not inform the board as quickly as he should have about the deficit. Heikkinen strongly pushed back.
“I told the water board as soon as I heard,” Heikkinen said.
Addressing the City Council in June, Heikkinen explained that the utility became aware of the deficit in April following preparations for an annual audit.
Finance supervisor Kathy Schwenn said in June that the utility's spending in 2017 came in under budget, but revenues from water bill payments fell short of predictions. The utility does not receive tax dollars, meaning that rates are the utility's only source of income.
Schwenn said due to an error, the budgeted revenue in 2017 was $45.6 million. The utility’s total revenue in 2017 was $38.1 million.
The contract and conditions from the mayor are contingent upon the City Council’s approval.