Hawk Cove, Texas, March 25, 2019. A concern has come up about sewer bills and the Police Department, and it comes from our own correspondence, so we would like to address it. At 11:37 a.m. on March 25, 2019, a USDA Rural Development employee in the McKinney office sent colleagues an email headed “City of Hawk Cove” (email, p. 1). It describes a call from Communities Unlimited and the City’s accountant. According to the email, the accountant “advised them that they could no longer use funds from water/sewer revenues to fund general operating expenses for the City (Police Department, Salaries) etc.”
The email continues: “Rhonda (Police Chief/City Administrator) apparently has notified Ms. Evelyn that she is going to have shutdown the police department because they have no money to continue operations.” It also offers a summary: “Basically they want to use those funds to pay for city general operations, because that is what they have been doing all along. Basically borrower from Peter to pay Paul and never putting funds back in Peter’s account.”
That is how a USDA employee described a phone call. Below it in the thread is the accountant’s own 11:18 a.m. email to the City, subject “ATTN: RHONDA.” It says she “CAN NO LONGER ADVICE YOU HOW TO MANAGE THE INCOME AND EXPENSES OF THE CITY OF HAWK COVE” and tells the City to “MOVE FORWARD WITH WHATEVER ACTIONS YOU DECIDE ARE IN COMPLIANCE WITH YOUR GOVERNING COVENANTS WITH THE USDA.” Her email does not mention the police.
Nobody borrowed from Peter
Eighteen months later, our budget set out the method. The Fiscal Year 2021 budget (the cover reads “Fiscal Year 2020” and “Darren Evans 9-14-2020”; the inside pages read Fiscal Year 2021, revision date 9/14/2020) explains: “Indirect costs are reallocated using the multiple allocation base method of OMB-A87 (Revised May 2004).” The basis is a “Labor Time Study (November 2019)”. The result is “Labor allocation rate - Sewer Fund Allocation to General Fund: 78.41%” (pg. 3).
The appendices, in thousands of dollars, show where the costs went. The General Fund carries an “ICR Expense Adjustment” of −204 (pg. 4). The Sewer Fund carries an ICR Expense Adjustment of 196 (pg. 6), and the Municipal Fund carries 8 (pg. 5). That adds up to $204,000 in costs moved off the General Fund, $196,000 of it onto the Sewer Fund.
Highlights (Fiscal Year 2021 budget, dollars in thousands)
- General Fund: revenue $126, payroll expense $228, net income $1.
- Sewer Fund: revenue $311, of which “Regular Revenue” $308; ICR Expense Adjustment $196; net income $4.
- Raises: “All city employees receive a 10% raise in wages with the exception of the Chief of Police/City Administrator” (pg. 2).
The budget does not list the salaries in the General Fund’s $228,000 payroll. Nor does it say whose work the Labor Time Study found on the sewer, or whether police salaries are among them. We do not hold a copy of the Labor Time Study. We are confident it was thorough.
Now an ordinance
On May 31, 2023, the Council approved an ordinance “providing for setting the sewer and wastewater treatment utility service rates” (minutes, pp. 5–6). Section 4 of Ordinance 2023-05-31.6 reads: “Utility System operating costs defined in Section 3 above that are incurred by City’s General Fund shall be transferred in reimbursement from City’s Utility Fund to City’s General Fund” (p. 2). Section 5(c) has the indirect costs “defined and calculated in, and pursuant to, the Office of Management and Budget Publication OMB A-87a” (p. 3). Our copy of the ordinance is unsigned, and its passage date is blank.
The figures since
| Budget record | Sewer billing income | Sewer labor |
|---|---|---|
| FY2023–24 actual | $251,059.54 | $204,851.03 |
| FY2024–25 year to date | $207,470.08 | $56,365.07 |
| FY2025–26 proposed | $257,456.00 | $117,088.08 |
These figures come from the amended FY2025–26 budget prepared by Mayor Delores Spence on August 30, 2025, lines “4061a Income-Sewer 3405-Current” (p. 5) and “9030 Sewer-labor-General” (p. 7). That budget says “All 23-24 and 24-25 details provided by city administrator other than actuals on property tax collections totals” (p. 2). In FY2023–24, sewer labor came to about 82 cents of every dollar of current sewer billing.
By FY2027 the arrangement runs the other way. In the amended proposed FY2027 budget, signed by Mayor Darren Evans, the General Fund “transfers $55,992.18 to Municipal Court and Sewer.” Sewer’s share is $45,635.45: “Sewer uses $5,058.74 of the Sewer #2 operating balance, reducing its General Fund transfer to $45,635.45” (p. 1). The same budget gives the Police Department $72.00 for fuel (p. 3, line “10200 PD-Fuel”), with $6,271.00 more under “6010 GF-Fuel” for vehicles the budget does not name. Paul is now paying Peter. As of October 20, 2026, that budget remains under consideration.
Sewer money has never been borrowed. It has been reallocated, reimbursed and transferred, each time by a method.