Newberry City Council met Thursday, May 5 in a work session to discuss the Utility Fund budget for the fiscal year 2022-2023. Utility Director Tim Baker and City Manager Matt DeWitt presented the budget.
“Our budget goal was to continue to provide reliable services to customers by skilled employees that are well trained,” he said.
When balancing the budget, Baker said he tried to keep in mind that the economy had been hard on both city employees as well as customers of the city.
Baker said the total estimated utility gross revenues for the upcoming fiscal year were $35,256,791, representing a slight decrease compared to last year at $37,843,774.
“This change is primarily due to the decrease in revenue projections in electric revenue,” he said.
Revenues decreased primarily due to lower-than-expected electric costs and slower than projected growth, along with the loss of one large utility customer.
Baker said a complete rate study was conducted in 2020 along with the city’s bond refinance and that a rate plan was selected and agreed upon that met the city’s financial goals while also being least impactful to our customers.
An annual increase of 2.5% and 1.25% for both water and sewer respectively are recommended to offset the additional debt capacity needed for the bond covenants and recommended by the city’s rate consultants, he said.
“These increases also help fund any emergency repairs on our system that we experience each year,” Baker said.
The average inside city residential customer will see a total increase of $1.31 per month based on a 5/8” meter and 600 cubic feet in water and sewer consumption.
City staff continues to evaluate retail electric rates, Baker said, and no increase is recommended at this time.
“Our primary wholesale power provider, PMPA, continues to explore different scenarios concerning their rate and demand structure,” he said. “The goal is to keep rates flat or decrease rates in the future.”
The line item of Finance is proposed to increase by $82,006 to $701,776, with the increase coming primarily from payroll costs and an increase in fees to the Paygo billing system.
The Information Services division, totaling $285,232 is recommended to increase $59,685 relative to last year. Baker said the major increases come from personnel costs related to reorganization and maintenance contracts for IT security.
Under the line item of Electric, totaling $1,425,344, there is a recommended increase of $70,641 relative to the prior year, mainly attributed to payroll increases and required maintenance on city substations.
Baker said the city’s oldest substation has been online for over five years and it needed to be serviced.
“They [substations] have service intervals just like your car does,” he said.
The service of one substation is proposed in this year’s budget, with plans for an alternating substation on the next year’s budget.
The Water and Sewer Distribution division is recommended to increase $170,438. Baker said this was attributed to payroll increases, maintenance contracts (including higher road patching) and higher material costs.
“Trying to get materials at a reasonable cost is hard to do right now,” he said.
The line item of Waste Treatment is recommended to increase $174,796, totaling $1,243,113, due mainly to higher utility costs than the year prior and much higher costs for sludge disposal, Baker said.
Employee Benefits is recommended to increase $104,087 relative to fiscal year 2021-2022. This increase comes from increased employer contribution to insurance and retirement match on increased salaries.
Non-departmental expenses, totaling $22,334,408 is recommended to decrease $3,287,965 relative to the prior year, with the decrease primarily coming from a reduction in projected electric costs and a decrease in the transfer to the Utility Capital Fund.
The Utility Administration Capital budget is recommended to decrease $414,900 making the total proposed amount budgeted $335,000. Baker said this decrease comes primarily from completing projects.
Electric System Capital is projected to decrease $105,000 compared to last year. This decrease comes from delaying equipment requests and projects.
Under Water System Capital, the budget, totaling $350,000 is recommended to decrease by $805,000. Baker said this decrease comes from completing some projects and delaying others.
“We will seek grant funding where possible and may make additional requests from council if recovery funds are available,” he said.
The Sewer System Capital budget, totaling $465,000 is projected to decrease $272,000, coming primarily from completing some projects and delaying others. Once again, Baker said that the department would seek grant funding and may make additional requests from council if recovery funds are available.
Baker said the department received a Rural Infrastructure Authority (RIA) grant in 2021 to complete residual handling at the water treatment plant. This process, he said will eliminate the need to recycle and building manganese in the city’s system.
“We are requesting to use the funds that were not used in 2021 due to timing,” he said.
Grant funds of $468,188 with the city’s remaining match being $111,347 for a remaining total project of $579,535.
The first reading of the budget will be conducted by City Council on Tuesday, June 7 at 7:00 p.m.
Along with the budget discussion, council reviewed answers to questions proposed by the Capital Project Sales Tax Commission on the amphitheater and its operations. A letter to the commission was then drafted by council to submit in disagreement with the cuts made by the commission on the city’s proposed projects.
Original source can be found here.
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