2024 Rate Increase Explanation

2024 RATE INCREASE EXPLANATION

 

On November 27, 2023 the City Council approved the 2024 Utility Fee Schedule. The rate increases are as follows: 2% to tiered Water rates, 2% to Sewer, 2% to Storm Water, and 4% to Recycling. These increases are needed for a variety of reasons which includes the implementation of best practices and the City’s goal to be able to fund infrastructure needs through utility rates rather than through special assessments and borrowing.

 The creation of a long-term rate structure is as follows:

Since City property taxes do not fund utility services, those costs must be recovered through monthly utility fees to residential and commercial properties within the City. The 2021 rate adjustments are based on a rate study analysis to ensure that each utility customer pays their proportionate share of the costs to provide services.

In addition to the above factors, each utility has other pressures on rates:

Water. The water fund has historically been operating at a loss. Because depreciation is a non-cash expenditure, the fund has had a positive operating cash flow since 2009. In previous years, the operating loss has been covered by the revenue received from antenna leases on the water towers. The revenue from the antenna leases has been moved out of the Water budget since 2018 and this revenue decrease has been recovered through water rates.

As presented, the Water Fund will have an operating income of $70,100. Net non-operating revenues and expenses decrease the net income to $5,100. The expense budget is increasing by 3.64% The non=operating interest expense is for the interest on the 2014 Water Bonds. 

2024 capital expenditures as identified in the 2024 CIP include wellhead protection updates, fire hydrants, a lead service inventory, and water valve replacements. The Water Fund's anticipated cash balance for the fund at the end of 2024 is $1,341,069  

 Sewer. As presented, the operating budget for 2024 will have an operating income of $63,460.. The total operating expense budget is increasing by 3.37%. Upcoming capital expenditures can be covered by the fund's current cash balances.

Projects identified in the CIP for 2024 include: Annual sewer rehabilitation, lift station updates and projects associated with road projects. The projected cash balance for the fund at the end of 2024 is $696,531.

 Storm Water. The Storm Water Fund is for the most part project based. Operating expenditures are mainly limited to engineering associated with NPDES, SWPPP and other state and federal requirements. Public Works time and materials spent on culvert cleaning/replacement are also charged to this fund. The purpose of this fund is to collect money for the larger Storm Water projects that will be required in the future. 

 Potential CIP projects in 2024 include: Projects performs in conjunction with road projects, the McCulley Road Outlet, and other Storm Water Improvements. The projected cash balance for the fund at the end of 2024 is $1,256,606.

 Recycling.  The Recycling Fund is used to account for curbside recycling and annual clean-up days. The rates are increasing by 4% to match the contracted increase in charges from Waste Management.

If you have any additional questions about the rate changes, please contact: 


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