Before Flint’s Lead Crisis, City Council Raided Money from 'Water Fund' State reviewers: Officials took cash water department needed to do its job

A few years before Flint’s lead crisis, city officials were taking money from a dedicated municipal water fund to pay for other uses. These fund-raids continued — using water service revenues to pay for unrelated city spending — even as the water fund accumulated a $9 million deficit in 2011.

Those were among the findings of a state review team that examined Flint’s books, which led it to recommend that the state appoint an emergency manager to take control of the city’s finances.

While that state review is now five years old, its findings warrant another look as they are relevant to later decisions city officials took leading up to the water contamination crisis.

The review team examined Flint’s financial condition in October and November of 2011. It found the city’s total debt had risen from $1.5 million in 2007 to $25.7 million in 2011. The city’s annual revenues rose from $104.5 million at the start of the period to $109.0 million in 2011.

The growing debt was the result of five years in which the city council and mayor failed to balance the city’s budget and control spending.

From 2009 to 2011, Flint officials took about $10 million from water service operations to pay for general city operations. These raids contributed to a growing hole in the city water fund.

The raids persisted even as the water department was dealing with its own imbalances. For example, the water fund had dug a $5.8 million deficit-spending hole by 2010, which deepened to $9.0 million in 2011.

Officials also raided Flint’s sewage disposal fund, taking $61 million for general city operations from 2001 to 2011.

And the city’s leaders broke state road funding laws by taking just over $1.0 million from the local street fund. That money comes from state and federal road funding grants, which come with a requirement they be used for streets and roads.

The state review team said that the raids could have harmful effects. “Simply put,” it said, “these other funds could lack sufficient cash to permit the performance of the statutory tasks assigned to them, to provide preventative maintenance or to plan for future replacement of equipment.”

In the case of the Flint water fund and department, one of those tasks is to provide clean drinking water uncontaminated by excessive levels of lead.

Marc Edwards, an environmental engineering professor at Virginia Tech who is credited with uncovering the crisis, said the city was in such dire financial straits that it "may have no choice, but to borrow from tomorrow, to pay for today."

He added, “The simple story, is that the lead poisonings arose from the MDEQ’s (Michigan Department of Environmental Quality) failure to implement corrosion control as the law requires. That is not a decision made by a governor, a mayor, or an emergency manager. The more complicated story, which certainly factors into the climate that allowed this problem to occur and continue as long as it did, is whether or not water is a basic right? What will we do, for the American cities or towns, that cannot afford to maintain, much less upgrade their water infrastructure?”

Edwards also said while there was “inevitably mismanagement,” he believes water is a basic human right and that should be provided.

Flint Mayor Karen Weaver didn’t respond to an email seeking comment. Roger Fraser, the former city administrator for the city of Ann Arbor who served on the state’s review team, said he would not comment on the Flint review.

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