Three months after Mayor Kevin Johnson and City Councilman Kevin McCarty publicly called for an audit of the Sacramento Utilities Department, the department will be audited extensively. The city’s internal auditor and an outside firm will conduct audits, the City Council decided Tuesday night.

The council’s decision comes a year after the Sacramento County Grand Jury claimed in a report that the department may have broken state law Proposition 218. The law says that utilities fees from ratepayers must correspond to the costs of delivering the utilities services.

Partly in response to the Prop. 218 issue, a citizens’ group placed a measure on the November ballot to roll back city utilities rates. It failed.

In a unanimous vote on Tuesday, the City Council began the process of hiring a third-party auditing firm. Under the city’s proposed timeline, the council would decide on a contract with an outside firm next month. The selected firm would present findings to the City Council in May or June, according to the city’s initial timeline, which was prepared by city staff.

The third-party auditor will “seek to identify best opportunities for immediate cost saving and operational efficiencies for the department as a whole,” according to a Jan. 18 report from the city manager’s office. “The study will include a review of levels of service, administrative and operational procedures, staffing levels, organizational structure and consideration of industry best practices.”

Mayor Kevin Johnson commented on the audit earlier on Tuesday, during his weekly press conference. He said the audit could revive the public’s trust. “I think it also gives us a chance to demonstrate fiscal responsibility,” he said.

City Auditor Jorge Oseguera will hone in on one or more specific issues at the department. After he pinpoints particular issues, he is expected to examine them in the 2011 / 2012 fiscal year, according to the report.

Assistant City Manager Patti Bisharat noted at the council meeting that the auditing process will also take into account studies that are currently under way in the department.

City staffers estimated in a Jan. 18 report that the cost range for the outside audit would be $80,000 to $120,000.

Kathleen Haley is a staff reporter for The Sacramento Press.