The City Council on Wednesday held its first workshop of the year to discuss a proposed budget for fiscal year 2017, which forecasts increased revenues in the general and utility funds and about $3 million in capital spending on projects, vehicles and equipment upgrades.
The budget is both an operational and a capital budget, Finance Director Shirley Hughes wrote in a staff report, which means it covers the city’s day-to-day operating costs like salaries, supplies and repairs, as well as equipment and vehicle purchases that can cost $50,000-$100,000.
Hughes anticipated the biggest topic at the meeting would be looming rate hikes to cover the utility fund deficit.
“The utility fund is having difficulty paying for its costs,” she said in a phone interview Tuesday.
The city’s general fund took out a loan to build the Boulder Creek Golf Club and was able to pay it back this year, Hughes said. Although $1.6 million from the “interfund loan” payoff has covered the utility fund’s deficit for fiscal year 2016 and the balance of the loan will cover the deficit for 2017, the fact remains that the utility fund is not making enough money to cover its own costs, Hughes said.
That is, in part, “because we have not raised rates in a while,” she said. Because the city’s utility fund is an enterprise fund, it needs to be self-sustaining.
A recent study sponsored by the Public Works Department found that the city would need to raise customers’ rates in order for its water, sewer and electric operations to pay for themselves.
“That’s going to be the biggest issue this budget season,” Hughes said. If the fund can’t pay for itself, its expenses will have to be folded into the general fund, which would add a huge deficit to that fund.
State law dictates the city’s tentative budget be submitted to the Department of Taxation by April 15. The final budget needs to be approved by May 31.
Contact Kimber Laux at firstname.lastname@example.org or 702-586-9401. Find her on Twitter: @lauxkimber