VEAZIE, Maine — Unless trustees act soon, the Veazie Sewer District will be unable to cover its operating costs — including payroll — by October, the utility’s auditor confirmed Wednesday night.

That is because the district is not taking in enough revenue to cover its operating and debt service cost, a problem that is exacerbated by a debt service payment due Oct. 1, trustees noted during a sparsely attended monthly meeting in the district’s garage.

During a review of the district annual audit and a look at monthly cash flow projections, Nick Henry of the Ellsworth accounting firm Horton McFarland & Veysey pegged the district’s annual operating costs at about $525,000.

Its revenues, however, amount to roughly $475,000, which results in a $50,000 shortfall, he said.

“We’re approving a budget we can’t hope to meet,” Henry observed during the three-hour session. He said that has been the case since he began handling the district’s audit four years ago.

The district’s poor financial outlook did not sit well with Chairman Rob Tomilson and Trustee James Parker, a state representative elected to the three-member board earlier this year.

“We either have to increase revenue or cut operating costs. It’s got to go one way or another,” Parker said.

Parker also was perturbed that funding he believed should have remained in reserve accounts — funds set aside for the purchase of big-ticket items and services — had been used to cover operating costs.

He also said that cash flow likely will be slower than usual because this year Veazie property owners also are being hit with a property tax increase.

Trustee Gary Brown, who holds the position of treasurer, did not participate in the discussion.

As to how costs might be cut, Superintendent Gary Brooks said that while cutting positions would save on operating expenses, the district is relatively small and as such has a small staff. He said that the district might save a small amount on electricity if it went with the different vendor.

Tomilson, however, suggested that Brooks shop around for less expensive medical and dental insurance for employees.

“Because that seems to be a pretty substantial part of our labor cost,” he said.

As a short term strategy to deal with the district’s cash flow problem, trustees voted 2-1 to:

• Put a freeze on any payments to employees for accrued benefits, such as sick day buy-back benefits and lump sum severance pay.

• Ask the Town Council to consider moving up a sewer assessment payment not due until December.

• Explore the possibility of obtaining an up-to-$100,000 “bridge” loan to cover costs until the district regains its financial footing.

Parker and Tomilson also directed Brooks to come up with a solid plan for cutting costs.

In the meantime, trustees said they planned to begin taking steps toward a sewer rate increase.

Brown, who cast the opposing vote, criticized the freeze on accrued benefits.

“Personally, I think anything less than a full paycheck is unfair,” he said. He also said he was against the notion of borrowing money “just in case.”