07/20/2009-CC-Minutes-Work SessionMINUTES: CITY COUNCIL WORK SESSION MINUTES
July 20, 2009
PRESENT: Mayor Joe Higgs, Councilman Thomas Muir, Councilman Russell
Martin Councilman Glenn Ervin, Councilman Andy Garza
MEMBERS
ABSENT: Councilman Robert Patton
OTHERS
PRESENT: Mike Brice City Manager, Rose Chavez City Secretary/Asst, City Manager,
Ted Christensen, Government Capital
1. Call Meeting to Order.
Mayor called meeting to order.
2. Review and Discussion of 2010 Budget and Tax Rate.
The City Manager proceeded in providing Council with some revised budget sheets.
He also advised that the next budget workshop is scheduled for August 3. He
continued with a Power Point budget presentation and explained that the intent
behind an Enterprise Utility is to generate additional revenues than the actual cost
for expenditures. The additional funds can be used for improvements to the water,
sewer or electric. Like most other cities some of those additional funds are
transferred to fund the General Fund. This helps the City by keeping the overall
tax rate down. The bonding companies discourage inter -fund transfers from the
Enterprise Fund to fund the General Fund. Unfortunately, neither the water nor
the wastewater generates excess funds. After the debt service is considered, both
are operating in a deficit. The only utility that has excess funds is the Electric
utility. The water and wastewater utilities have gotten to this point because we have
not been consistent with raising utility rates.
The City Manager advised that the 2009/2010 budget as he has prepared it includes
utility rate increases. If the utility rate increases are not considered he will have to
adjust about two hundred thousand off the budget. The Power Point presentation
continued with a comparison of revenues and expenditures, considering cost to
operate, capital cost and projected revenues for next year. The presentation
including the following issues:
• Revenues vs Expenses with no rate increase projects an excess balance
of $53,249.
to
• Revenues vs Expenses with rate increase projects a balance an excess
balance of $253,249. The budget transfer in the budget is $225,000.
• Water and Wastewater Utilities need to be operating back in the
black.
• Proposed increases in residential and commercial rates for Water,
Wastewater and Electric were discussed.
• Proposed budget in water and wastewater reflects a fairly severe
trimming of expenditures.
• Wastewater revenues need to be sufficient to pay for a large portion of
the annual debt payment on the proposed new wastewater plant.
• Wholesale water cost from Upper Trinity continues to increase. The
increase was over 5% and it did not impact the City as much since we
produce our own water. As we become more dependent on Upper
Trinity for wholesale water that will impact the City every year.
Discussion continued concerning the rate increases that will be structured within the
next four to five years. The City Manager advised that the last water rate increase
was in 2005, and the last sewer rate increase was in 2006. The City Manager
strongly recommended the rate increase and emphasized that the proposed budget
is based on revenues from these rate increases. The projected increase is 10%
across the board. The residential base rate is going up to 5%. The sewer maximum
is going up from $35.00 to $45.00. Since the base rate was not raised by 10% the
actual increase reflected on the residential customer is 7-8%. The commercial
increase is about 11 %.
The Power Point presentation continued with a comparison of water and
wastewater rates in other cities. The new rate for Sanger is still below the average
in the comparison. The City Manager continued to emphasize the importance of
raising the utility rates. The increase in the water rates is still not sufficient to bring
the water utility into the black. The discussion continued concerning future debt
service for the new sewer plant.
The Electric rate increase was discussed as follows:
• The residential rate increase is .1175.
• The commercial rate is .1200 with no demand charge.
• Large commercial customer using 10 million KWH will be billed at a rate of
.105 (currently Wal-Mart Distribution is the only high user)
• The savings in electric could offset the increase in water and sewer.
• The minimum base rate will increase up to $1.00 on the residential and
commercial rates.
Discussion included that we will not bill demand usage. The rate will be a flat rate.
We will continue to monitor the demand usage. The City Manager requested that
he would like to adopt the new fee schedule in August and have the electric rates
take effect in August. This will allow the customers to get a break on their bill.
Then he would like to wait until October for 'the water and sewer rates to go in
r
effect.
Councilman Martin asked how we purpose to notify the customers of the changes.
The City Manager advised there are several ways to inform customers, the
newspaper: city's website and small messages on the utility bill.
Councilman Ervin asked if they raise the utility rates then the taxes do not go up.
The City Manager advised that he was correct.
Councilman Garza expressed a concern with the rate increases and the impact it
will have on citizens who are on limited incomes.
Lengthy discussion continued concerning the tax rate, rate increases, and the
demand rate on electricity.
3. Overview of Items on Regular Agenda.
The City Manager advised that Councilman Patton requested that item #11 be
tabled for the next Council meeting when he can be in attendance.
A brief review followed concerning current revenues.
4. Adjournment.
Mayor Higgs adjourned the meeting.