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36 City of Pleasanton Operating Budget • FY 2023/24 - FY 2024/25
<br /> Enterprise Fund
<br />Water Fund
<br />Revenues from water sales are expected to increase by 14.9 percent in FY 2023/24 and increase
<br />by an additional 9.5 percent in FY 2024/25. Large increases are due to the City-owned wells, which
<br />accounted for approximately 20.0 percent of the City’s water supply needs, having been taken
<br />offline while selection of a viable solution to remove contaminants is being explored. In addition, the
<br />City’s water rates have not been adjusted since 2020, which has resulted in revenues not keeping
<br />up with increasing costs for operation and maintenance of the infrastructure.
<br />Due to operating expenses increasing at a faster rate than corresponding revenue increases in
<br />recent years, the Water Utility program has been supplementing its operating costs with the use of
<br />reserve. As reported to the City Council on February 21, 2023, FY 2022/23 projected ending funding
<br />balance is less than the minimum 30.0 percent required under the City’s reserve policy. To prevent
<br />the reserve level to deteriorate any further and close a funding gap, a series of reductions totaling
<br />approximately $1.3 million in FY 2023/24 compared to FY 2022/23 have been incorporated, including
<br />removal of annual transfers to the water capital fund for capital improvement projects and
<br />reducing repair and replacement funding, in addition to increasing revenues based on preliminary
<br />analysis.
<br />Staff is preparing to conduct a comprehensive water rate study into which the water supply
<br />solution and potential cost increase, together with anticipated capital needs, will be incorporated.
<br />The first phase of the rate study is scheduled to be completed in the fall. As such, numbers
<br />included in the FY 2023/24 and FY 2024/25 budget, summarized in Table 9 below, reflect estimates
<br />based on preliminary analysis. Once the rate study is completed, any recommended budget
<br />amendments, as necessary, and proposed rate adjustments, will be presented to the City Council
<br />for consideration.
<br />General Fund
<br />Fund Balance
<br />Projected Ending
<br />Fund Balance at
<br />06/30/2023
<br />Recommended
<br />Adjustments
<br />Projected Ending
<br />Fund Balance at
<br />06/30/2024
<br />Recommended
<br />Adjustments (2)
<br />Projected Ending
<br />Fund Balance at
<br />06/30/2025
<br />Unrestricted General Fund Reserve (1)$29,060,659 $4,112 $29,064,771 $293,889 $29,358,660
<br />COVID Response & Recovery 399,150 (80,000) 319,150 (319,150) -
<br />Crisis Response Program 400,000 (400,000) - - -
<br />Mobile Outreach Vehicle 280,000 (280,000) - - -
<br />Restricted General Fund Reserve 17,625,110 - 17,625,110 - 17,625,110
<br />Total $47,764,919 ($755,888)$47,009,031 ($25,261)$46,983,770
<br />Table 8: General Fund Projected Reserves
<br />1 Projected Unrestricted General Fund Reserve of $29,060,659 excludes GASB 31 fair value adjustments, a loss of $3,592,581.
<br />2 Recommend converting the COVID Response & Recovery Reserve to the Unrestricted General Fund Reserve.
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