Agenda - Council - 12/12/1995 - Laserfiche WebLink

Home

I I I I CASE ADOPT 1996 ENTERPRISE FUND BUDGETS By: Jessie L. Hart, Finance Officer Background: Enclosed for your review are the Proposed 1996 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 ~or Enterprise funds. In order to establish fair rates for all of the utilities that the City operates, it is necessary to determine the actu~ cost of providing those utilities to the residents. Due to the "young age" of the City's utility system, it is extremely difficult to immediately realize profits, but it is important that any losses in ~e fu'st years of operation be representative of what the system actually costs. An important facto~ in these costs is the recovery of depreciation through the rate structures. We are required to ke~p the accounting for these funds on the full accrual method which means recognizing total depreciation, whether on City or developer installed systems. This is what we have attempted to d;o ~n prepanng the attached Proposed 1996 Enterprise Fund Budgets. General Budget Information Some assumptionsi have been made that effect the manner in which we have prepared the attached budgets. [~ was budgeted in the General Fund that 180 new residential homes would be built during 1996. Df this total, 160 urban additions is the number that was utilized in preparing the attached budgeB. Costs that can be attributable to both 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 tha identifiable funds. Water Utili _ty Fund Utilizing 160 new additions to the system for 1995, it is estimated that total revenues for 1996 will be approximaiely $219,216 which includes interest earnings of $40,000. These revenue projections also in{orporate the rate increases that were adopted October 24, 1995 and become effective January [1, 1996. Expenditures are estimated to be at $201,730 which includes depreciation (non-qash) of $94,832.. This results in a budgeted operating income for 1996 of $17,486 which is a~ bit more than break even, and decreases the deficit in retained earnings to a projected positive balance of $15,394.