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Budget committee’s draft directs $815,000 in wastewater gross‑receipts utility tax toward streets in draft budget
Summary
City staff and committee members discussed routing $815,000 from wastewater gross‑receipts utility tax receipts into street funding in the draft budget, while noting the wastewater fund retains a large reserve and that some tax changes would require additional approvals.
At a City Budget Committee meeting (date not specified), staff presented a draft budget that includes $815,000 from gross‑receipts utility tax revenues associated with the wastewater utility to be applied to street funding in the coming fiscal year. The committee discussed the size of the wastewater fund balance, existing capital projects, bond considerations and the process required to change utility tax rates.
The proposal is part of a broader presentation on enterprise funds; staff said the wastewater fund would still record a $1,200,000 transfer to surplus and that the draft budget contains $1,200,000 for wastewater capital projects. Sheila Perry, finance staff, called the approach “creative,” and staff emphasized the wastewater fund remains substantially funded compared with other city funds. “The wastewater fund at the end of FY24 has a fund balance of $11,806,000,” staff said, noting total budgeted expenditures for the fund this year are $14,000,372.
Why it matters: committee members pressed that using utility tax receipts for streets can improve near‑term street funding but could affect long‑term financial metrics that affect bond pricing and future capital decisions. Staff said bond counsel was consulted and provided no adverse feedback on the proposal, and noted the city’s financial policy requires a 17% fund balance for the general fund; by contrast the wastewater fund’s balance is much higher than that percentage.
Key details from the discussion: - Staff said the wastewater budget shows an $815,000 line in the administrative budget tied to gross‑receipts utility tax receipts that the draft would use to help streets. The presentation also shows a $1,200,000 transfer to fund balance and $1,200,000 in capital projects for wastewater in the draft budget. - Staff described several capital projects listed in the draft: rehabilitation or replacement on West Main/West High/Hart Street collection lines; collection work related to the Fairmont and Lee Street/Dockery/Cordell areas near Morrow Drive; and smaller collection improvements tied to an upcoming stormwater project. - Staff noted existing wastewater bonds remain outstanding; principal and interest for existing bonds are included in administrative accounts. Staff cautioned that drawing down a fund balance can affect bond ratings and future borrowing costs, and recommended caution for any large, permanent shift in reserves. - Staff reported they contacted bond counsel before proposing the allocation and said they received no negative feedback. - Committee members asked about governance and the process for changing gross‑receipts utility tax rates. Staff said changes to certain utility taxes that predate state restrictions could require a public vote under the Hancock Amendment; by contrast, the city’s internal allocation of a gross‑receipts utility tax specific to wastewater could be adjusted by council action and would likely be handled via a budget amendment, subject to public‑hearing steps when required.
Dissent and caution: several committee members said they support finding more money for streets but asked that staff ensure the wastewater utility is not left undercapitalized in the future. Staff repeatedly affirmed the wastewater fund would remain positive after the proposed allocation and that the administration intends to recommend a rate study for utility rates to guide decisions beyond the current budget window.
Next steps and process: staff reminded committee members that proposed amendments to the draft budget are due to finance by September 12 (deadline provided during the meeting), the committee will meet to consider amendments on September 18, and the city council meeting to vote on the budget is scheduled for October 6 (with an October 20 fallback date if needed). Any formal changes approved by the committee will be incorporated into a substitute budget bill that staff will attach account‑level details to before the full council vote.
No formal policy change was adopted at the meeting; committee members directed staff to prepare materials and to proceed with the regular amendment and public‑hearing schedule.
