Provo proposes 12.5% utility transfer to general fund; public hearing set for June 17

Provo staff told the City Council the tentative FY2026 budget includes a proposal to transfer 12.5% of utility enterprise revenues to the general fund as a dividend to city taxpayers.

Finance and budget staff framed the transfers as analogous to dividends paid to investors by investor-owned utilities, noting that the city’s ratepayers are the ultimate owners of municipal utilities. Dan Follett, who presented the notice to ratepayers, said the transfers support general-city services such as police, fire and parks and also help keep property taxes lower.

The proposal would move $16,362,425 from utility enterprise funds to the general fund (12.5% of utility billings), and add approximately $1,712,074 in administrative overhead transfers from enterprise funds that benefit from shared central services. The combined proposed transfers total $18,075,173.

Follett said the city mailed a notice to utility customers and is required by state law to hold a public hearing on the transfers before adopting the budget; the hearing is scheduled for the council meeting on June 17. He described the transfers as a management decision to treat municipal utilities as sources of civic dividend that offset property-tax burdens.

Councilors asked how the proposed level compared to private companies and to peer cities. Follett and staff said dividend rates for investor-owned utilities often range 5–10 percent and that municipal comparisons vary; staff offered to deliver a comparative analysis of transfers used by other Utah cities.

Staff acknowledged the transfers reduce enterprise fund cash balances and said projections show the utilities could maintain required cash-on-hand and planned capital work under the proposed transfer schedule. Council members were advised the transfers are part of the FY2026 tentative budget and will be confirmed after the public hearing and final budget adoption.