Highlights of the Fort Smith Board of Directors Meeting 4/8/25
At the Fort Smith Board of Directors study session held 4-8-25 at Fort Smith Senior Activity Center on Cavanaugh, the Board discussed a package of spending cuts proposed by Director Rego. The package is being called Curbing Unrestricted Taxpayer Spending (CUTS). The plan involves 12 of the 13 departments that receive allocations from the Water and Sewer Operating Fund (W&S) being required to cut their 2025 budget by 15% and also to do an additional one-time 5% budget cut and redirect the funds from both the 15% cut and the 5% cut to the W&S to be spent on consent decree sewer work. The Engineering Department which also receives allocations from W&S would be required to cut their 2025 budget by 8% and also do an additional one-time 5% budget cut and redirect the funds from both the 8% cut and the 5% cut to the W&S for consent decree sewer work. Police, Fire, Parks, Streets, and Solid Waste do not receive allocations from W&S.
The cuts from the Board of Directors would generate $98,516 for W&S. The cuts from Mayor would generate $123,127. The cuts from City Administration would generate $327,660. The cuts from Internal Audit would generate $121, 495. The cuts from Human Resources would generate $175, 741. The cuts from City Clerk would generate $83,951. The cuts from Finance would generate $374,803. The cuts from Purchasing would generate $158,128. The cuts from IT would generate $1,846,799. The cuts from Communications would generate $86,123. The cuts from Citizen and City Services (formerly known as Sustainability) would generate $50,772. The cuts from Planning would generate $217,399. The cuts from Engineering would generate $243,540.
Also individual cuts for 25% for spending on dues and subscriptions in all departments, a 10% cut of the Mayor’s special events budget, and a cut of $100,000 from the Convention Center are proposed. Cuts are proposed for two projects at the Transit Headquarters, one for the construction of the access road and one for a slow-fill fueling station. The total cost of those two projects would be $2,952,830, but 90% of the access road project cost and 80% of the fueling project cost would be reimbursed by the federal government. The City’s required local contribution for both projects would only total $515,000.
Director Christina Catsavis expressed that the 5% total reduction is her biggest concern with the proposal. She mentioned that some of the departmental budgets are heavily made up of labor and benefits costs and have relatively little variable spending. She used the Engineering department as an example with it only having $80,000 budgeted outside of labor and benefits and that the proposed cut would need to be $93,669.
She voiced her view that water and sewer budget cuts should be included in any proposed cuts saying “I worry a lot about” waste in the utilities department. She advocated for looking at the water and sewer budget first.
She also advocated for looking at travel and conference spending, especially in the utilities department. She suggested implementing a citywide travel policy including requiring pre-authorization for trips and a report afterwards about what was learned and another three months after the trip about how the learning was applied in the department.
Instead of the CUTS package, she advocated for priority based budgeting in which each department starts with zero budget and has to justify every item in their budget based on needs and priorities instead of the current system based on building the budget based on making adjustments to last year’s allocations. She also suggested quarterly budget reviews instead of a yearly budget meeting, changes to procurement practices including going out and actively soliciting bids to get better prices, and selling or leasing unused City owned property.
Director Kemp said that before he would support reductions across all departments he would like the department heads to come to the Board with proposals with a more conservative option for their department’s budget. He also advocated for any budget discussions to include a focus on targeted outcomes, with no water rate increases being one possible example of an outcome. He agreed with Director Christina Catsavis about reducing the amount of City owned property.
Acting City Administrator Dingman clarified that the budget construction process used in 2025 was the same as has been used for years in the past where the department heads are asked to reduce costs or provide justification for increases over last year. They are asked “Are you getting everything that you need?” and told to put in everything that they need to provide services at a particular level. But in recent months there has been a “realization” that when the revenues and expenses are added up “it’s been a long time since we’ve had those numbers match” and that to continue to budget at such a deficit will not not sustainable. He said “An approach that reduces overall spending is a charge that I’m taking seriously.” He also mentioned that much of the travel budget is in-state travel for required certifications like water operators licenses, but said travel “needs to be looked at.” He said “We are budgeting and spending too much money.”
Finance Director Richards voiced concerns about maintaining fund balances and reserve percentages and achieving a balance for ongoing revenue and expenditures. He expressed concerns about inflation saying that all of the same things are costing more. The same expenses as last year are more expensive with updated costs. In recent years past, the budget has usually been constructed and approved with about a million dollars per year deficit and the 2025 one has a $5.7 million deficit. He says they are asking “Can we do the same things cheaper?” He said that priority based budgeting can be used to focus on high value low cost items and possibly cut high cost low value ones based on the outcomes that are desired.
Director Christina Catsavis asked if the current budgeting method creates a “use it or lose it mentality.” Dingman said that historically they haven’t seen that. Departments try to focus on how much they can not spend and that in recent years “pretty consistently a good amount of operating budget goes unspent.”
Director Martin added that in recent years that the budget is approved with a deficit but always comes out positive or nearly positive in the end. He said “Budgets went really well, then 2024 happened” and the Board “went bananas” on spending. He said of priority based budgeting “I really like the concept.” and praised the format’s ability to prioritize based on service and getting what is really wanted and if a program is not providing the desired level of outcomes that it may need to be stopped, reduced, or to have more expected out of it.
Director Rego said that the department heads are all “conscientious stewards of their resource.”
Dingman suggested that the Board could devise a ranking of all the services currently provided by the City so that department heads could know how to prioritize when budgeting.
Director Good called the department heads “frugal” and said “We always have money that is not spent.” He expressed concerns about the Board sending “mixed messages” by telling department heads to “tell us what you need” but then saying that the City does not have money for those requests. He said “I don’t think priority based is a bad idea.” However, he said that he expects that the budget based on Board priorities would be “much higher budget than what staff would present.” He voiced his view that the Board needs to rely on listening to the department heads. Dingman said “The priorities need to come from the Board” and that department heads should start with that.
Director Christina Catsavis said “Budgeting needs to be strategic, not reactive.” She said “Rego’s plan would cut employment.” She mentioned that the CUTS package cut for the Planning department would be a 38% cut if only looking at variable spending not labor and benefits. She expressed a preference for line item by line item targeted cuts rather than blanket percentage cuts.
Director Good mentioned that every yearly budget hearing listens to staff and that he talks to department heads individually before the meeting. He suggested that if more time is needed to prepare and discuss and understand the budget that the Board could just slow down and take their time.
Director Settle mentioned the greater transparency and budget detail provided to the Board in recent years than was provided in years further in the past. He mentioned that when the consent decree was new, 77 people were hired in response to it and wondered if they are still needed. He said “We’re not going to be able to do everything for everybody.”
Director George Catsavis criticized that “spending spree last year.” He also suggested selling the convention center to save nearly a million dollars a year.
It was put on the agenda that at the Board meetings on 4-22-25 and 4-29-25 the Board will dedicate from 6-9:30 pm both nights to discussion regarding the budget.
Utilities Director McAvoy, Deputy Director of Systems Hall, Deputy Director of Utilities Engineering Johnson and the Board discussed the equipment needs, costs, and other potential plans to address water leaks. The department has been experiencing challenges in being able to repair leaks because of lack of and failure of equipment. At this time they do not feel additional staff is needed but each of the 5 crews of 4 employees each team working on leaks needs a one-ton service truck, a 5-ton dump truck, and a backhoe and backhoe trailer. The crews all share one extend-a-hoe. The cost of that equipment for each team would total $361,116. Hall said that the existing old dump trucks especially are “huge challenges” noting that 2 of the dump trucks are down currently. McAvoy mentioned that one dump truck has already been down 3 times this year. One extend-a-hoe and another backhoe have both been down 4 times already this year. The leak repair equipment overall is averaging being down once a month. Even with 2 crews down for a week, the utilities department still managed to repair 120 leaks last month. McAvoy mentioned that in addition to being more reliable and able to perform more repairs more quickly, newer equipment would not cost so much to maintain and would be under warranty.
Director George Catsavis asked if there is a sinking fund for the equipment. McAvoy answered that there is not. Director George Catsavis said that a sinking fund would be the “most logical way” to address equipment costs and timely replacement. McAvoy agreed but added that there is such an equipment deficit that there would be a “sinkhole” that “we would need to dig ourselves out of” first. Hall added that scheduled timely replacements would allow for standardized models instead of the current “hodgepodge” and that would result in faster maintenance at the fleet repair shop. Dingman mentioned that Solid Waste and Streets have sinking funds that they put back for equipment each year so that they don’t have similar problems. He said that establishing one for Utilities would require an upfront investment. He suggested the possibility of setting one up that would allow for outfitting one crew at a time each year. He mentioned that in a previous year there was a $400,000 budget item discussed for the equipment but that it “did not survive the budget process.”
Director Kemp asked if having the 5 crews properly equipped would increase the current 100-150 leaks fixed per month to closer to his goal of 250 leaks fixed per month. McAvoy said that it would.
Hall mentioned a challenge with some of the employees in the water leak crew because they “have to home grow them” from little to no experience because there isn’t a school for that profession and that it takes years to build up the experience needed to operate the machinery and do that job. Johnson mentioned that the shortage of licensed operators is a challenge. McAvoy added that the licensing test has a 40% passing rate. Hall said that the recent pay increase has helped the utilities department stop “hemorrhaging” employees on the leak crews. Director Christina Catsavis suggested implementing a retention policy in which employees would have to pay back a prorated amount for money spent on obtaining licenses if they did not stay employed by the City for a certain length of time. McAvoy said that he would “love” to add a policy like that but he knows that in the private sector it has been deemed unconstitutional. He said that he would have the City Attorney look into the legality of such a policy in the public sector. Hall mentioned that the practice of using temporary workers for 90 days before extending them a permanent job offer has been helpful with retention because the employee and the City get to try each other out. He said that they lose 70% of the temporary employees before the 90 days are up, but other than a little bit of basic safety training there is no training for them. He named the late and irregular hours including holidays and weekends and the outdoor working conditions as two of the biggest factors that discourage employees from wanting to stay.
Director Martin asked why the needed equipment was not included in the budget. McAvoy said that he submitted all of the department’s needs but Finance prioritized the consent decree and money ran out before the request for the equipment was brought to the Board.
Director Kemp asked about potentially using a hydroexcavation truck. Hall mentioned the $750,000 cost of the truck and the additional crew training that would be needed. Director Kemp asked if there was a time with a lower number of leaks. Johnson said that over time leaks have increased because of aging infrastructure. He mentioned that if the 1% of the City’s pipes that are 2 inch galvanized pipes were replaced that that would alleviate 15% of leaks. However, replacing those lines would cost $14 million. He said that in 1992 the master water plan recommended adding pressure reducing stations downtowns where there are very old brittle cast iron lines. The pressure reduction from that would help reduce leaks, but they would cost $4 million each to install. He also mentioned that there are 65 miles of asbestos concrete pipes that have exceeded their life expectancy and are the second leakiest type. Director Kemp said “We have too many leaks and people wait too long to have them fixed.” He asked what would be needed to make it so that leaks in yards would be fixed in 90 days. Johnson answered the replacement of the 2 inch water lines first, secondly equipment for the leak crews, and thirdly the downtown pressure reducing stations.
Director Settle mentioned that Bentonville recently doubled their water rates because of water leaks. He suggested looking into buying PVC supplies directly from the manufacturer to save money. He advocated for line replacements saying “Fixing a leak is reactive, replacing a line is proactive.” He said that the City should “stop chasing leaks” and instead replace lines. He suggested replacing 4 or 5 miles of lines per year and having 4 of the existing repair crews continue with repairs and the fifth crew instead doing line replacements.
Director Martin expressed concerns about purchasing the additional equipment possibly having a negative impact on the debt service ratio and being able to meet the bond covenants to avoid a rate increase. McAvoy said that he had been instructed by the City Administration to find short term and long term reductions to the utilities budget. In doing so, including cuts like deferring maintenance on equipment and reducing training and travel, he was able to find $1.1 million in short term cuts. By enacting those cuts and instead spending that saved money on the new equipment, the debt ratio would not be changed.
A vote on purchasing equipment to fully equip two leak crews with the cuts suggested by the Utilities department from their budget will be added to next week’s meeting agenda.
During the Citizens Forum section of the meeting Andy Posterick expressed concern about the April 1st fatality of another cyclist hit by a vehicle. He told the Board that he plans this weekend to get together a crash response team of citizens to meet at the site of the accident and find small, cheap, temporary measures that can be taken to improve traffic safety there.
Kim Fodge spoke in favor of installing the downtown water pressure reducing station and advocated for priority based budgeting. She also asked about a meeting she had heard was held Friday regarding the City of Fort Smith potentially providing water to the proposed prison to possibly be built in Franklin County. Dingman said that at the meeting on Friday they “didn’t really get very far into that discussion” but that there was discussion about the water situation and possibly the transmission line that is needed to provide better service to the East side of Fort Smith could be designed to provide water to the prison also. He said that there “might be interest” in that sort of partnership but the lack of funding for the transmission line may mean that the timeline for it may not align with the prison’s timeline. Fodge expressed concerns about the prison being a burden on the Fort Smith water supply and the cost of the transmission line.
South Sebastian County residents Claire Garvey and Tony Williamson spoke in opposition to the rate increases for out-of-town residents. Out of town residents are now charged 1.5 times the Fort Smith rate. Garvey expressed frustration with the extra charge and the lack of communication regarding the increase.
Krystal Cadelli spoke in favor of priority based budgeting. She also called AMI water meters “good technology” but said that the City cannot afford them right now. She suggested cheaper regular meters without plastic housings instead.
Chris Cadelli suggested again that the purchase of the water slides be reallocated from the general fund and instead come out of the Parks budget. He also advocated for cutting the parks budget and spoke in favor of priority based budgeting and quarterly budget reviews.
Molly Echiveria expressed frustration in keeping visiting out of town family busy during a recent visit to Fort Smith. She called the local tourist attractions “same old” and “underwhelming.”
Lavon Morton spoke to mention that from an accounting perspective spending for water leak crew equipment and/or for water line replacement would be considered capital expenditures (not operating expenses) so they would have no effect on the debt service ratio. This would allow them to be purchased without having to worry about that negatively impacting the ability to meet the bond covenants.
Jo Elskin spoke to suggest that morale could be improved while making budget cuts that will work well by making sure to include “boots on the ground staff” in decision making as to where the cuts should occur.
Laura Van Hook spoke to introduce the Board to Lotus House, a recovery house where single women come to live for a minimum of 6 months after rehab. Residents there have to work, volunteer, attend spiritual meetings, and attend recovery meetings. Director George Catsavis asked how the facility is funded. Van Hook answered that it is funded out of her pocket. Director Martin asked how many women live at the facility. Van Hook answered it can house 10-21, with each room with its own bathroom being shared by 2 women.
The Board discussed the City Staff request to make a Request for Proposals regarding the feasibility, funding for, and implementation of an Advanced Metering Infrastructure System (AMI) for water metering. The existing Automated Meter Reading (AMR) system has been experiencing failures that have resulted in inaccuracies and customer service issues. The inaccurate readings require extra labor to conduct rereadings and manual readings and for customer service in dealing with the billing issues. Some irrigation meters have been found to have registered zero usage for 2-3 years. Some meters have registered zero usage so customers were not billed in those months where no usage was registered but then when the correct meter reading was obtained customers received large catch-up bills. Unlike most cities, Fort Smith adjusts those bills rather than requiring the customer to pay the catch-up bill, but it is still upsetting for customers to receive the bill and have to reach out to get it adjusted. The billing department has had to adjust $600,000 dollars in bills due to incorrect billing from meter read discrepancies. Advanced Metering Infrastructure was previously discussed some at the 11/12/24 meeting.
McAvoy said the current AMR meters were installed in 2017 and 2018 and while they work well in places where they are primarily installed in basements so they don’t get wet and excessively cold, here they are installed in meter boxes and get wet and the plastic housings break in cold weather. He said that these meters break faster than the City can get them replaced and they are running out of warranty soon.
Director Settle said the “Board was sold something that wasn’t right” and suggested that the City’s legal counsel address that with the manufacturer. He also advocated for going back to manual meter reading for at least the short term. He said that technology will get better in the next 10 years. He mentioned that he has had 3 AMR meters fail at his own house. He suggested potentially going to only manually reading the meters every other month and estimating every other month. He also suggested paying meter readers more if necessary to keep the positions staffed.
Director Martin mentioned that the AMR meters were originally adopted to reduce costs but they have not actually done so.
Director Christina Catsavis expressed her support for going back to manual meter reading. She also wondered how the number of water users is increasing but the revenue for water is not also increasing. Director Settle answered that it is because with every rate increase people use less water by intentionally conserving.
Director Kemp asked if some overbilling results from broken meters. McAvoy said that 99.9 % of the broken meters bill low, not high. Deputy Utilities Director Robertson said that sometimes the department misses when a meter rolls over and that results in customers erroneously receiving an astronomical bill.
McAvoy said that AMI meters have a 20 year lifespan and are ultrasonic rather than mechanical so they are “more robust” for the lack of moving parts and are very accurate.
Director Good expressed concerns about loose dogs if the meters were to be read manually. McAvoy said that meter readers currently go through dog attack training because the entire North side of town is still read manually.
Multiple members of the Board seemed to express agreement that going back to manual meter reading would be the best solution for the short term.
