Sewerage and Water Board Executive Director Ghassan Korban 

The New Orleans Sewerage & Water Board is tens of millions of dollars short of the funds it needs to complete the projects it has scheduled for next year, and another $50 million in its plan for improvements relies on loans the public utility has not yet secured.

The proposal to spend $170 million on upgrades, repairs and other large-scale projects in the utility’s capital budget was laid out as S&WB officials unveiled it and the separate $296 million operating budget for 2019 on Monday.

The budget is the first for the new leadership installed at the S&WB this year after months of turmoil stemming from the breakdown of its drainage system during heavy rains last year. And it comes as the utility is seeing its reserves dwindle as spending has outpaced its collections.

The capital budget itself represents only a fraction of the 200 projects worth $582.6 million that are needed for the utility's water, sewerage and drainage systems, Chief Financial Officer Yvette Downs said.

Only about $72 million of that money — a mix of funding from the Federal Emergency Management Agency, the U.S. Army Corps of Engineers and previous bonds issued by the utility — is already in hand, she said. Some of the rest could be made up by issuing new drainage bonds, which would fund about $40 million in projects over multiple years, Downs said.

Another $51 million in water and sewer work would depend on the S&WB securing low-interest loans through a federal program administered by the state, Downs said.

Even if all those plans come together, the utility still would be $26.6 million short of what it needs for the 2019 capital program, she said.

Downs said the decision to go after the loans was part of an effort not to spend operating revenue — needed to run the utility day-to-day — on more long-term expenditures.

Board member Poco Sloss, who attended some of the meetings in Baton Rouge about the loans, expressed confidence they will come through. “I was pleasantly surprised by how eager Baton Rouge was to loan us money,” Sloss said.

Executive Director Ghassan Korban said that while the utility has a prioritized list of projects, its most pressing needs can vary as new problems crop up and the public and the City Council push to have them addressed.

As an example, he referenced a hearing earlier in the day on last month’s boil-water advisory, which was prompted by an outage in Entergy power. Among several problems that led to the drop in pressure was a lack of equipment that would allow one of the utility’s turbines to operate in cold weather, something Korban pledged to fix.

“It would be suicidal if I said, ‘No, we’re not going to do that,’ ” Korban said.

“We’re constantly adjusting. We don’t have the luxury of having a master plan,” he added. “If I tell you my priorities today, a week from now, they might change.”

The budget comes at a financially precarious time for the utility. The S&WB pulled $80 million from its reserves to pay for repairs, equipment and staff after two summer floods flooded parts of the city last year. And this year it has drained those accounts even further as expenses have outpaced collections amid widespread billing problems.

Altogether, the three separate systems that make up the S&WB had about 53 days of cash on hand at the end of September; the drainage system had completely burned through the money in its coffers.

Agreements the S&WB committed to when it issued bonds in recent years require it to keep enough cash on hand to run those systems for at least 90 days.

The S&WB expects to spend about $296 million next year on operations, maintenance and paying off previous debts, according to the operating budget. The utility also expects to put aside enough cash to come back into compliance with the bond agreements, Downs said.

The budgets for the water and sewerage systems include a 10 percent rate increase, the next to last in a series of eight annual hikes that were authorized by the City Council in 2012. 

The water system is expected to bring in about $105.8 million next year, about $4 million less than this year. The sewerage system will have about $128.9 million in revenue, about $1.8 million less than in 2018.

The drainage system, which is funded through property taxes rather than through customers' bills, is estimated to receive about $61.3 million, almost $6 million more than this year.

The budget proposes cutting 136 vacant positions at the S&WB that have long been unfilled, leaving the utility with about 1,580 positions including 206 that are now vacant.

Korban said the reductions would not affect any positions that are currently occupied and there will be no layoffs.

Officials could not say exactly how much eliminating those positions would save.

Korban said the positions to be cut were assigned to tasks that are not top priorities at a time when the S&WB is looking to build trust by focusing on customer service and repairs to meters and streets.

And, he said, the S&WB plans to be flexible if new needs arise.

“If you bring me a need, we’ll talk,” he said.

Follow Jeff Adelson on Twitter, @jadelson.​