Minutes 10/28/1975 - Laserfiche WebLink

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TUESDAY OCTOBER 28, 1975 and Sewer Funds. Mr. Yeaman's October 22nd summary shows that for the first quarter Water Fund consumer sales are running 5.8% below budget estimates and sewer service charges are 8.5% below budget estimates. If current trends continue, both funds will show an operating deficit of $20,518.00 for the year, instead of a projected profit of $60,081.00, and Council will be forced to deplete the Water and Sewer Fund surplus accounts by $80,599.00, the sum of the $20,518.00 deficit and the $60,081.00 transfer to the General Fund. And this is exactly what happened to the Electric Department Surplus. In my opinion, Council must act now to preserve the strength of the City's utility funds. I feel it is not fiscally sound to make future generations borrow money for capital expansion and improvements because today's citizens used money set aside for these purposes to live on. Now, I would like to comment on the Electric Department. In June, Mr. Corekin estimated that the City will purchase approximately 15 percent more kilowatt hours in 1976 than in 1975. At that time I argued that Mr. Corekin's sales projections might be overly optimistic when compared to other forecasts throughout the proposed city budgets. After a great deal of discussion, I moved and Council voted 3-2 to take a conservative approach and budget a transfer of $485,000.00 from the Electric Department to the General Fund, even though Council realized that if Mr. Corekin's sales forecasts materialized and if optimistic assumptions regarding the cost of purchased power from Apco proved correct, the potential net profit of the Electric Department could be greater than $485,000.00. Council voted to take the conservative approach for two reasons: (1) To set aside a reasonable safety margin to guard against another potential forecasting error. (The profits of the Electric Department had been over-estimated for the past four years). And (2) to hopefully provide the Electric Department with a badly needed addition to surplus. Mr. Yeaman's October 22nd figures verify that Council's conservative approach was correct. For the first three months kilowatt hour sales have increased ~ of 1%, far below Mr. Corekin's estimate of 15%. Mr. Yeaman projects that if current trends continue yearly gross sales of power will fall short of the budget estimate by 10.3%. However, the projected net profit figures are still above the scheduled transfer of $485,000.00 from the Electric Department to the General Fund because Council cautiously revised Mr. Corekin's sales estimates downward. ,10