Ogden City staff explain $7 million in proposed utility transfers to general fund

Ogden City officials explained at a June 3 City Council work session that the tentative 2026 budget proposes transferring just over $7,000,000 from four enterprise utility funds into the city’s general fund.

The transfers are part of the budget proposal the council will consider later, and staff said state rules require notice to utility customers when the city proposes moving money out of enterprise funds.

City staff described the transfers as a long-established mechanism. “We do request in that utility transfer, which is equivalent to a 12% transfer,” Justin, a staff member presenting the item, said. He added the city also collects a 5% administrative fee to offset centralized costs such as legal, human resources and payroll.

The nut of the policy is that these enterprise funds — water, sanitary sewer, storm sewer and refuse — are intended to be self-supporting through user fees. Staff said the 12% transfer is calculated on user-fee revenues for the year, not on total budgeted expenditures, because some funds budget use of prior-year fund balance for capital projects. That calculation produced the $7 million notice figure for the four utilities combined.

City staff put the transfers in budget context: the general fund proposed budget is just under $95,000,000, of which about $7,000,000 would come from the utilities. Property tax revenue is projected at roughly $23,000,000 and sales tax about $27,000,000. The staff presentation included an example: the water fund transfer of about $3,400,000 represented roughly 9.44% of the water fund’s total expenditure budget, because the 12% is measured against annual user-fee revenue, not total expenditures.

Council members asked for background on the practice. Staff said Ogden has used similar transfers for many years and that the state began requiring public notice of such proposed transfers about 11 years ago. Staff also noted the transfers act as a payment in lieu of franchise and property taxes that would otherwise be charged to privately owned utilities; because the city owns the utilities, those taxes are not collected directly from them.

Several council members raised equity and policy questions. One council member noted that because a sizable portion of the city’s land area is tax-exempt — including government, institutional and nonprofit parcels — shifting part of municipal funding to user fees spreads the cost to every property that receives utility service. Staff said approximately 12% of parcels are tax-exempt but they account for a larger share of the geographic area.

Council members also asked whether the practice and the fixed-percentage approach should be revisited, given recent water-rate increases and ongoing infrastructure needs. “Maybe it’s not the percent,” one council member said, suggesting alternatives such as a flat fee or periodic adjustment to the percentage. Staff replied the structure is ultimately a policy decision and recommended the council could direct staff to analyze options and long-term impacts.

Staff emphasized that approval or denial of the transfers would occur when the council adopts the budget; today's discussion and the mailed notice are part of the required process.

The council did not take formal action on the transfers at the work session. Staff said they would include the transfers as noticed in the budget documents and could provide further analysis if the council requested it.