Agenda - Council - 12/09/1997 - Laserfiche WebLink

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I I I I I I I I I I I ,I I I I I I I REVIEW AND ADOPT 1998 ENTERPRISE FUND BUDGETS By: Jessie L. Hart, Finance Officer Background: Enclosed for your review are the Proposed 1998 Enterprise Fund Budgets which cover the Water Utility Fund, Sewer Utility Fund, Street Light Utility Fund and the Recycling Utility Fund. While formal budgets are required to be prepared and adopted annually for the General Fund, this is not the case for Enterprise funds. In order to establish fair rates for all of the utilities that the City operates, it is necessary to determine the actual cost of providing those utilities to the residents. Due to the relatively "young age" of tho City's utility system, it is extremely difficult to immediately realize profits, but it is important that any losses in the first years of operation be representative of what the system actually costs. An important factor in these costs is the recovery of depreciation through the rate structures. We are required to keep the accounting for these funds on the full accrual method which moans recognizing total depreciation, whether on City or developer installed systems. This is what we have attempted to do in preparing the attached Proposed 1998 Enterprise Fund Budgets. General Budget Information Some assumptions, have been made that effect the manner in which we have prepared the attached budgets. It was budgeted in the General Fund .that 100 ne~_~w resid&ntial homes would be ~e assump~lAg~}-woutd3~ ~b~a~ ._a_d~itjo~n_s~_t_h.he~r. efore, this isthe number 'that was utilized in preparing th.e~tacl~d-budgets.~-Costs~that-~an be ~attn uta e o ot e Water an~-g~wer U--~tility~F~-uT~d-~'are being split 80% to the Water Utility F~F-~-d~ the Sewer Utility Fund, with all other costs charged to the identifiable funds. Water Utili .ty Fund Utilizing 100 new additions to the system for 1998, it is estimated that total revenues for 1998 will be approximately $466,038 which includes interest earnings of $90,000. These revenue projections do not include a rate increase for 1998. Expenditures are estimated to be at $366,306 which includes depreciation (non-cash) of $160,000. This results in a budgeted operating income for 1998 of'$99,732 and would increase the retained earnings accordingly. Capital outlay type items, such as watermain looping and extensions of services will be dealt with during early 1998 when the capital improvement program is developed.