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REVIEW AND ADOPT 2002 ENTERPRISE FUND BUDGETS- <br /> By: Diana Lund, Finance Officer <br /> <br />Background: <br /> <br />Enclosed for your review are the Proposed 2002 Enterprise Fund Budgets Which cover the Water <br />Utility Fund, Sewer Utility Fund, Street Light Utility Fund, Recycling Utility Fund and Storm <br />Water Utility Fund. While formal budgets are required to be prepared and adopted annually for <br />the' General Fund, this is not the case for Enterprise funds. ' <br /> <br />In order to establish fair rates for' all of the utilities that the City operates, it is necessary to <br />determine the actual cost of providing those utilities to the residents. Due to the relatively <br />"young age" of the City's utility system, it is extremely difficult to immediately realize profits, <br />but it is important that any losses in the first Years of Operation be representative of what the <br />system actually costs. An important factor in these costs is the recovery of depreciation through <br />the rate structures. We are required to. keep accounting on the full accrual <br /> the <br /> for <br /> these <br /> funds <br />method which means recognizing total depreciation, whether on City or developer installed <br />systems. This is what we have attempted to do in preparing the attached Proposed 2002 <br />Enterprise Fund Budgets. <br /> <br />Water Utility Fund <br /> <br />It is estimated that total revenues for 2002 will be qpproximately $746,712 which includes <br />interest earnings of $120,000. Residents will be charged $22.95/quarter for water sales in 2002 a <br />4.8% increase over the 2001 rate of $21.90. The rate increase will offset the additional <br />expenditures fbr the operation of a second water tower which is in its first full year of operation. <br />Expenditures are estimated to be at $521,227 which includes depreciation (non-cash) of <br />$260,000. This results 'in a budgeted operating income for 2002 of $225,485 mhd would increase <br />the retained earnings accordingly. <br /> <br />I <br />I <br />I <br /> <br />Sewer Utility Fund <br /> <br />It is estimated that total revenues for 2002 will be $639,324 which includes interest earnings of <br />$40,000. These revenue projections incorporate a rate increase effective January 1, 2002 of 4.2% <br />with rates increasing fi'om $58.07/qum'ter per residential account to $60.50 per quarter. <br />Expenditures are estimated to be at $581,664 which includes depreciation (non-cash) of <br />$220,000. This results in a budgeted operating profit of $57,660. <br /> <br />-355- <br /> <br /> <br />