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Sewer enterprise fund: $320 million Maxon upgrade, PAYGO accounting and a large carryforward drive forecast variance
Summary
Public Works reported steady sewer revenues and ongoing projects including a $320 million Maxon wastewater plant upgrade and a planned large solar array; staff said carryforwards and capital pay‑as‑you‑go accounting explained a large materials and supplies variance in the FY25 forecast.
Public Works briefed the budget committee on May 7 about the sewer enterprise fund, describing steady revenues, major ongoing capital work and accounting practices that affect year‑to‑date forecasts.
Scott Morgan told the committee the division supports the Memphis 3 plan and assesses sewer capacity for growth. He said the department "will continue the upgrades at the Maxon treatment plant. That's a $320,000,000 project that's been going on since about 2018, '20 '19, about 2 years left. And then we'll finalize design of a large solar system, that's scheduled for that plant."
Committee members pressed on an adopted‑to‑forecast variance in materials and supplies and a one‑time forecasted project amount. Morgan explained the forecast included carryforward funds and PAYGO project costs that remain in the year‑to‑date material and supplies forecast until projects are closed and capitalized.
Morgan described staffing and operator licensing challenges at treatment plants and said the utility has an operator trainee program and new training partnerships for industrial mechanics to build internal capacity. He explained the sewer fund has historically used cash PAYGO where possible but has also issued revenue bonds — the division recently sold a $65,000,000 series — to support major projects.
No vote or formal action was taken at the meeting; staff said they would refine forecast presentations and provide additional documentation to the committee.
