ITEM 15 ATTACHMENT 1 - Laserfiche WebLink

Enterprise Funds The City's enterprise funds include utility programs (Water, Sewer, Storm Drain), golf, cemetery, and paratransit services. Water, Sewer and Storm Drain utilities are highlighted below. Water Fund Revenues from water sales are expected to increase by 5.0 percent in FY 2025/26 and by an additional 5.2 percent in FY 2026/27. These increases reflect baseline adjustments for both fiscal years at this point. The City is conducting a water rate study with a rate increase anticipated in January 2026. This phase of rate increase will help the Water Fund to address the infrastructure funding gap and some of the critical projects identified in the Water System Management Plan approved by the City Council in December 2024. The anticipated rate increase will also help the Water Fund to restore and maintain the 35.0 percent reserve target. At the end of FY 2025/26, the reserve is projected at 34.9 percent. It should be noted that this reserve level assumes only a $0.1 million transfer to the Water Capital Fund for capital projects in FY 2025/26, which is not enough to maintain and improve the existing infrastructure. The rate study is scheduled to be completed in fall 2025. Once the rate study is completed, any recommended budget amendments, as necessary, and proposed rate adjustments will be presented to the City Council for consideration. Sewer Fund Sewer revenues are expected to increase by 3.1 percent in FY 2025/26 and an additional 3.2 percent in FY 2026/27. A rate study is scheduled to begin at the end of 2025, following completion of the Sewer System Management Plan (SSMP) and the Long -Term Sewer Capital Improvement Plan (CIP). In the interim, sewer rates will be adjusted based on the Consumer Price Index (CPI) until the study is complete. Like the Water Utility Program, the Sewer Utility Program also lacks funding for infrastructure investment. Although the Sewer Fund reserve is projected at 36.8 percent at the end of FY 2025/26, which meets the 35.0 percent reserve target, this was the result of reduced annual transfers to the sewer capital fund for capital improvement projects and reduced repair and replacement funding in prior fiscal years. The rate study is expected to address the funding needs to support critical capital projects. Storm Drain The Storm Drain Utility continues to experience a funding gap where operating costs are higher than the revenues. To cover this funding gap, the General Fund has been providing an annual subsidy of more than $0.6 million each year to cover some of the deficit. Additionally, a couple of one-time transfers were made through the year-end process in both FY 2022/23 and FY 2023/24 to eliminate the negative fund balance. However, with revenues staying mostly static at just over $0.5 million while operating costs are increasing WA