FY 2425 2526 Recommended Operating Budget

projects that are moving forward, typically housing, are not generating the same fees as in the past.

The fund is budgeted with revenue of $5.9 million and $5.8 million for FY 24-25 and FY 25-26, respectively. The fund is still anticipated to have an on-going annual deficit mainly because of certain activities that are not meant to be full cost recovery such as public counter/general information services, strategic initiatives, and special projects, as well as other subsidized services. These activities need to be supplemented by other funding sources, mainly the General Fund. The Recommended Budget reflects the support provided by the General Fund to the Development Services Fund by the elimination of the General Administrative charges that the fund would otherwise require to be paid to the General Fund for the internal services cost such as Finance, Human Resources, etc. of approximately $0.6 million annually. This is in addition to an interfund loan of approximately $1.0 million in FY 23-24. It is worth noting that an interfund loan of approximately $2.9 million was envisioned in the FY 20-21 and FY 21-22 budget. However, with higher revenue collection coupled with conservative spending, this fund did not need an interfund loan from the General Fund until now. As expenditures continue to outpace revenue for the foreseeable future, it is necessary to revisit the fee schedule. Staff expects to bring forward to City Council an update to the fee schedule after the adoption of this budget. The Water and Wastewater Utilities are enterprise funds that derive all of their operating revenue from customer charges. As a result of the 2019 wastewater rate study, followed by the 2022 water rate adjustments, the Council approved a five-year annual rates adjustment plan to ensure that public safety and health remain a priority, the integrity and reliability of these essential community assets can be maintained, and aging and inefficient infrastructure can be addressed. In addition, the City is currently engaging a consultant to update the wastewater rates as the current rate schedule is in the final year of the approved five-year schedule and is expected to come to the Council this summer. The rate adjustments provide proper reserve levels in accordance with Council policy, continue meeting legally required debt coverage, and ensure sufficient funds are available for capital projects. Water and Wastewater Funds

Water Fund

The City’s Water revenue is projected to be $21.5 million for FY 24 -25 and $23.5 million for FY 25-26. With the approved rates plan, the water fund operationally is forecasted to be able to maintain appropriate reserve levels, including rate stabilization and system replacement fund reserves, and fund much-needed capital projects associated with the repair and improvement of the aging system.

BUDGET MESSAGE 23