Minutes 11/28/1988 - Laserfiche WebLink

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MONDAY, NOVEMBER 28, 1988 withdrawal of PSA participation in our plant-and the Five Year Forecast figures show an unexplained'increase in revenue 'in those Vears. Both sets of figures show transfers to the General Fund for both funds terminating with FYSB/Ge. Again, here, the question arises as to whether the intention is to provide water and sewer service generating a net profit to offset other expenses of City Government or not. As was said before. historically both Funds have generated a profit and, while the attachments to the April 27, 1988 memo do not show it, it is our recollection that transfers of around a total of $400,000 to $500,000 - they amount to $544,515 for FY88/89 - have been made.from these Funds to the General Fund since at'least FY86/87. In our opinion this has been a proper practice and Sewer and Water rates should be'adjusted beginning in FY89/90 to allow the practice of transfers in approximately this amount to continue in the future. Mr. Brown noted in his memo forwarding the Five Year Forecast that a rate increase of 18% in the Sewer Fund and 15% in the Water Fund would be required for these results. While we believe that some reduction from the estimated increase in expenditures in the. 'Water and Sewer Funds could be achieved through greater efficiency, excluding the large specified. e,~penditures (i.e. the storage tank and piping, the water main to the tanks, the 4 MGD Capacit~ in the Lower Smith River Interceptor>, the expenditure increases in these funds over the next two years is modest. (In the Sewer Fund from FYGS/89 to FYGe/90 4.6% and-from FY89/90 to FY90/e15. 4% and in the Water Fund from FY88/89 to FY89/90 4% and from FY89/90 to FY90/91 less than 1%.) Therefore, we believe onl~, modest reductions could be achieved. On the other hand,'we note that, without an'~ rate increase, the revenues'in the Water Fund are projected to be flat.over the next five years which fa~t indicates that water consumption is pro~ected to be flat over the per'iod. Under these circumstances we seriously OL.estion the necessity of an additional water storage tank and piping and a new main to the tanks for a total cost of ~476 r>r~o over the nex~ t~o years. Summary - Enterprise Funds We believe that the Enterprise Funds can, and should, generate sufficient net profit either through increased efficiency or increased rates to continue their contributions to the General Fund at the FY88/87 level, thus eliminating the $926,785 revenue decline in the General Fund shown on the Five Year Forecast between FY88/89 and FY89/90. As consumption of electricity and use of water and sewer increase moderately in the remaining years of the Forecast period, we would expect net profits of these Funds to increase modestly and that the contribut ons from these Funds -5-