02/12/02 - Laserfiche WebLink

Home

REVIEW AND ADOPT 2002 ENTERPRISE FUND BUDGETS By: Diana Lund, Finance Officer Background: Enclosed for your review are the Proposed 2002 Enterprise Fund Budgets which cover the Water Utility Fund, Sewer Utility Fund, Street Light Utility Fund, Recycling Utility Fund and Storm Water 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 the 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 means recognizing total depreciation, whether on City or developer installed systems. This is what we have attempted to do in preparing the attached Proposed 2002 Enterprise Fund Budgets. Water Utility Fnnd It is estimated that total revenues for 2002 will be qpproximately $746,712 which includes interest earnings of $120,000. Residents will be charged $22.95/quarter for water sales in 2002 a 4.8% increase over the 2001 rate of $21.90. The rate increase will offset the additional expenditures for the operation of a second water tower which is in its first full year of operation. Expenditures are estimated to be at $521,227 which includes depreciation (non-cash) of $260,000. This results in a budgeted operating income for 2002 of $225,485 and would increase the retained earnings accordingly. Sewer Utility Fund It is estimated that total revenues for 2002 will be $639,324 which includes interest earnings of $40,000. These revenue projections incorporate a rate increase effective January 1, 2002 of 4.2% with rates increasing from $58.07/quarter per residential account to $60.50 per quarter. Expenditures are estimated to be at $581,664 which includes depreciation (non-cash) of $220,000. This results in a budgeted operating profit of $57,660.