Minutes 11/28/1988 - Laserfiche WebLink

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MONDAY, NOVEMBER 28, 1988 that the City chose to provide these services to generate · revenues in excess of expenses so that those excess revenues could be used to offset other costs of City government to keep taxes and other City government fees to a minimum. Or the rationale could be some combination of botN. It appears from attachments to a memorandum dated April 27~ 1988 from Mr. Brown to Council, that each of, ou~ Enterprise Funds has had a "Net Income" every year from FY77/78 through FY87/88 except the Sewer Fund in FY87/88. (Although the FY87/88 figures do not appear on the attachment to the memo, we added them thereto.) And, comparing the Audited Revenue and Audited Expenditures as shown on the attachment to Finance Director Dick Fitts~ memorandum to Mr. Brown dated October 51, 1988, it appears that even the Sewer Fund had a Net Profit for FY87/88. The Electric Fund · ' We have'noted, however, that from the attachments to the April 27, 1988 memo referred to above~ever since FY82/85 more moneyhas been transferred from the Electric Fund to the GeneralFund than has been generated by the Electric Fund as Net Income. In the Five Year Forecast this pattern is continued in FY88/89 when the transfer is anticipated tB exceed Net Profit bV $451,287 and in FY89/90 when even the reduced transfer of $1.250,000 is anticipated to exceed Net Profit by $202,752. This pattern, if continued, will result in continued diminution of the Electric Fund Surplus until, as is shown on the Five Year Forecas~ it disapmears in FY92/95. Given this. situation in the Electric Fund, we believe that the original phi'losophical question has been answered, i.e. the rationale behind the Electric Fund is that the'Electric Fund is expected to generate a Net Profit which is to be used to offset other City expenses. However, a further Ouestion now arises: Should money in excess of the Net Profit be transferred from the Electric Fund? Council asked Mr. Brown to provide us with what he believes to the the minimum unappropriated surplus to be retaine~ in the Electric Fund and his answer was approximately $!,000,000. We believe that transfers above Net Profit which would reduce the unappropriated surplus below this amount would be inappropriate. On the other hand, we Ouestion whether everything Oossible is being done to maximize the net profit of the Electric Fund. The City Administration, with Council~s concurrence, has determined to fix its rates by paralleling the rates of Appalachian Power Company (APCO). Therefore, Net Profit cannot be increased by increasing rates unless this determination is changed or APCO increases its rates. On the other hand~ Net Profit of the Electric Fund in