Finance staff proposes $1.3M general-fund transfer to cover sewer-fund shortfall; warns of additional rate pressure

City finance staff told the Sierra Vista City Council the city expects an estimated $1.3 million general-fund surplus for fiscal year 2024 and recommended transferring available excess to the sewer enterprise to cover obligations created by council action on the golf-course acquisition and by large sewer repairs.

"As we discussed in the acquisition of the golf course, ironically, that we were going to forgive the note for Castle and Cook for the sewer interceptor...the outstanding balance after their July payment" was described as $609,000, finance staff said. The staff recommendation would transfer available excess general-fund balance to the sewer fund so ratepayers are made whole for the forgiven note.

Finance staff said the transfer would still leave the general-fund reserve at about $10,500,000 — a level staff described as the highest in the city's 38-year record. At the same time, staff warned the sewer fund has substantial cash-flow issues caused by two major sewer-line repairs last year with combined costs of about $1,800,000; sewer-fund revenue for the prior year was $3,600,000, the report said.

Staff said a transfer would not remove the need for future sewer-rate action. The city manager and finance staff told council they will return with additional operational recommendations and that the auditors' recent work influenced final balances and timing of the recommendation. Council members asked for the basis of the recommended amounts and were told the council may choose to transfer more funds but that subsidy would not remove the need for a rate increase.

The transcript records a staff recommendation and council questions; no final council vote appears in the record.