06.30.20 Budget Workshop - Laserfiche WebLink

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City Council Meeting Minutes June 30, 2020 Stormwater utility rate model & base assumptions, review of fiscal year (FY) 2021 rate and impacts and discussion on rate increases beyond FY 2021 through CIP constraints. Ms. Moyer stated that the Capital Improvement Project (CIP) doesn't affect the current year's budget but it will affect the following year's budget when the first debt payment begins. Ms. Moyer mentioned that Council approved back in March a $3.5M reduction in the amount of CIP projects. That was a one-third reduction. That debt payment has been reduced by one third of funding CIP list provided in May had the unconstraint general fund at $6.2M and also included the Covid CIP which was reduce in FY21 as a recommendation by 30%. Ms. Moyer stated that at the next budget workshop, staff will bring back any ideas that we can pursue to control construction projects. Ms. Moyer stated that the stormwater rate model doesn't impact FY21 but will in the future and will discuss how to reduce the impacts. Ms. Moyer stated that rate model projects with financial performance including revenue projections, cost of service and expense, which also assists with different scenarios in funding future expenses and what rates are needed to support those numbers. Ms. Moyer mentioned the rate model will have a new rate structure for FY 2021 using impervious cover instead of lot size. The billing changes in ordinance includes billing the land owner, on commercial property. There was no FY20 rate increase which creates a greater revenue needs for FY21. Ms. Moyer stated the Base Modeling Assumptions: • Includes increase to operations and maintenance (O&M) based upon CIP • 3% of CIP implemented with 2 yr lag • Rate increase should first achieve financial policy goals & then address CIP expenditures: • 25% minimum Fund Balance (General, W/WW & Electric) • 1.20 debt service coverage ratio (W/WW & Electric) • FY21 CIP reduced by $4.0 Million with use of existing funds for projects that were delayed or completed with money available. Ms. Moyer stated the FY21 Rate Increase by previous Council direction: 5 years of 15% increases to respond to citizen concerns. Done in FY18 & FY19, there are 3 years remaining There was not an increase in FY20 because of the process of restructuring the utility. City of San Marcos Page 8