Recommended FY 2022-2024 Operating Budget and CIP

Major Revenue Assumptions (continued)

updated in 2017. The updated fees were approved by the Council and went into effect in March 2022. The fund is budgeted at a higher revenue of $6.2 million and $6.3 million for FY 22-23 and FY 23-24, respectively. Even with higher projected revenue, 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 initiative and special projects, as well as subsidized services. These activities need to be supplemented by other funding sources, mainly General Fund. The Recommended Budget reflects the support provided by the General Fund to the Development Services Fund by a reduced General Administrative charge back of approximately $0.4 million annually. This is in addition to an interfund loan of approximately $1.0 million in the current year. 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. Wastewater Operations Fund (640) The Wastewater Operations Fund receives revenues from user charges based on water usage. Rates are set from a three month average of water consumption during the winter months, which is typically the lowest period of water consumption. All expenditures for the operation of the wastewater (sewer) system, including maintenance and debt service, are charged to the Wastewater Operations Fund. Total revenue for FY 22-23 and 23-24 are budgeted at $14.8 million and $15.6 million, respectively.

On May 1, 2019, the Council approved the wastewater rate update which includes a five year annual rates adjustment plan to address significant shortage in funding for the legally required repairs and improvements to the existing system. With the approved rates plan, the wastewater 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 of the aging system. Other capital projects such as a second Relief Trunk Line to the Treatment Plant and Treatment Plan expansion are included in the six-year CIP and are expected to be funded by impact fees and through bonds funding. Water Operations Fund (650) The Water Operations Fund receives revenues from user charges based on water usage. All expenditures for the operation of the water system, including maintenance and debt service, are charged to the Water Operations Fund. Actual water revenue is dependent on customer usage. The City’s Water revenue is forecasted to increase from $15.2 million projected for current FY 21-22 to $17.6 million in FY 22-23 and $19.8 million in FY 23-24. The City is currently going through the Proposition 218 process to increase the water rates for the next five years. The projected revenues for the Recommended Biennial Budget reflect the increase in water rates to meet the minimum reserve levels set by the Council, ensure sufficient funds available for the much needed capital projects, keep pace with the expenditures and to ensure the City’s water system integrity and reliability.

86 BUDGET SUMMARY