Agenda - Council - 12/10/1996 - Laserfiche WebLink

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I I I I I I I I I I I I I I I I I I I FC CASE ADOPT 1997 ENTERPRISE FUND BUDGETS By: Jessie L. Hart, Finance Officer Background: Enclosed for yo,ur review arc the Proposed 1997 Enterprise Fund Budgets which cover the W~ater Utility Fund, So~wer Utility Fugd~ StreeL~L_ight~U~t_i_[i_tz_ Fund an_d_.the_Re_cyc_l__'__mg Utility Fund. Wlu~fo~rm~l'~bt~gg_t-~care requ_i/'ed~to_ be prepared and adopted ann~u_a!l_y_for th~-Geff~ral--Frff/d7 -this is n°t the case f°r Enterprise funds~-- .,In_order to establish fair rates for all of the utilities that the City operates, it is necessary to .d__e_termine the actual cost of providing those utilities to the residents. Due to the "young age" of . th___e_~ity's utility System, it is extremely difficult to immediately realize profits, but it is important ._tha~t any losses inlthe 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 means recognizing total gepreciation, whether on City or developer installed systems. This is what we have attempted to;do in preparing the attached Proposed 1997 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 120 new residential homes would be built during 1997.: The assumption was made that all 120 would be urban additions, therefore, this is the numbor that was utilized in preparing the attached budgets. Costs that can be attributable to botli the Water and Sewer Utility Funds are being split 80% to the Water Utility Fund and 20% to the Sewer Utility Fund, with all other costs charged to the identifiable funds. Water Utility_ Fund Utilizing 120 new ~additions to the system for 1997, it is estimated that total revenues for 1997 will be approximately $407,233 which includes interest earnings of $60,000. These revenue projections also in~rporate 5% rate increases that are being proposed at this meeting and would become effective January 1, 1997. Expenditures are estimated to be at $319,671 which includes depreciation (non-clash) of $147,314. This results in a budgeted operating income for 1997 of $87,562 which is 'a' bit more than break even, and would increase the retained earnings accordingly. It should also be noted that during 1992 the City incorporated the Water Access Charge (WAC) for future demand on the system for expansion and modification. The items outlined in the notes as CIP expenditures Will be funded primarily from the WAC charges.