If the Limestone County Water and Sewer Authority fails its annual bond test, officials are taking cost-cutting measures to avoid rate increases.

Friday, interim General Manager Tammy Smith said the eight measures approved by the authority board in May out of a nine-point cost-cutting proposal made by former general manager Tony Sneed have been implemented. But whether it’s enough to convince investment bankers that the authority is turning finances around remains to be seen.

The authority pays debt service on $70 million in bonds.

Auditors perform bond tests annually to determine a utility’s eligibility for construction bonds and determine the rates the utility must charge customers to repay the bonds. In a mid-year review certified public accountants Cecil Armstrong Jr. and Annette Barnes of the local firm of Christopher, Durham, Pepper and Armstrong, reported to the board in March that the authority would not pass its September bond test.

In a letter to the board dated May 1, Scott Bamman of Thornton Farish Investment Bankers in Birmingham, the authority’s bonding agent, Bamman wrote:

“… without some improvement in results over the second half, there is a possibility that the Authority might have to report the covenant problem to the trustee shortly after the end of your fiscal year. I believe that it is quite important that actions be implemented to attempt to mitigate the magnitude of any problem at the end of your fiscal year.

“There is still a full five months of operations during which the effects of any changes might be felt … In looking at the financial data from the meeting last week, the ratio of total expenses to recurring revenue of 109 percent is the relationship that needs to be examined.”

In mid-August the board voted to fire Sneed, citing a decision to “go in another direction” on the general manager post. The board then named 15-year authority employee Tammy Smith as interim director. Three days later the authority fired comptroller Harvey Cooper.

If the nine-point plan that Sneed proposed in April that was designed to save the authority a total reduction in annual operating expenses of $517,787 were:

• No raises for grades 8 and above until the bond test is passed, saving $31,559

• Discontinue paying (board legal counsel) Mike Cole for lobbying services, saving $48,000

• Hire Melissa Green as in-house engineer and no longer use Hethcoat & Davis for ancillary services or subdivision review and inspection, saving $73,611

• Discontinue residential radio read meter program for large replacement projects, saving $85,000

• Continue to strictly monitor overtime and look at ways to reduce it, saving $106,633

• Reduce accounting fees by bidding out auditing services, saving $30,000