LIVERMORE FALLS – The town’s financial condition is stable, auditor Ron Smith told selectmen Tuesday.

He noted that last year $75,000 was added to the undesignated fund, and an additional $10,000 was earmarked for contingency.

However, the concern auditors have is with the Sewer Department enterprise account, Smith said.

The department is a separate entity from the town, but overseen by selectmen in their capacity as sewer trustees. The budget is paid strictly by sewer users.

The infrastructure is getting old under the pavement, he said, and needs to be upgraded.

Several new sewer lines have been replaced in the last two years. Another major replacement is needed on Main Street for a nearly 100-year-old main and is estimated to cost $570,000, Sewer Department Superintendent Kent Mitchell previously said.

The user service fees collected during the audit period, Smith said, were $342,000 and about $489,000 was spent.

The town is among many in the state facing aging wastewater systems and trying to figure out how to pay for expenses related to upgrades, he said.

The sewer department was in the hole $203,000 but $183,000 of that was on paper for depreciation, he said.

You didn’t write out checks for it but it’s real, he said.

He recommended another rate increase.

Sewer trustees raised the sewer rate about 10 percent in October 2008 and it became effective Jan. 1. It was the first increase in about 10 years.

The minimum sewer rate was set at $50, up $5, and the consumption rate was increased from 2 cents to 3 cents per cubic foot or 7 gallons of use.

The concern is that there is not enough money in the till to maintain the system, he said.

He previously presented a budget plan for review that included a nominal increase in the first year and another increase in the fourth year, he said.

“It sounds like you’re there,” Smith said.

The 10 percent is not going to begin to cover expenses, interim Town Manager Kristal Flagg said.

He suggested a budget plan be developed for the next five years.

It would be helpful to have a plan, selectboard Chairwoman Louise Chabot said.

As of June 30, 2008, the town’s undesignated fund was $1.086 million, which covers about three months of operating expenses, he said.

For the town’s operating budget of $4.4 million, auditors like to see $1,025,000 in undesignated funds, enough to operate the town three months in case anticipated revenue doesn’t come in, he said.

Overall, the town’s revenue was $4.5 million and $4.37 million was spent, he said.