Frostburg staff propose midyear budget amendments; finance director urges new $1–$2 million water-surcharge reserve target

City staff presented a midyear budget amendment package and recommended changing the water-surcharge fund’s target balance to a fixed dollar range of $1 million to $2 million rather than the current 30–50% of operating expenses.

The finance director told commissioners that insurance premiums rose after building appraisals increased values and that sewer projects (notably combined sewer overflow, CSO, work) have shifted timelines, producing larger-than-anticipated changes in sewer-fund schedules and reimbursements. “So those are some of the bigger line items that you see reflected,” the finance director said when outlining the proposed amendments.

Why it matters: Staff said the current percentage-based target for the water surcharge fund would leave too small a reserve as operating expenses decline with debt paydown. Staff recommended a dollar-based target of $1 million to $2 million so the fund can cover sudden capital contingencies such as a failed transmission main or pump station repair. The finance director noted the fund balance was approximately $953,000 at the time of the report and said the $1 million floor was achievable under the current budget.

Budget items and next steps: The midyear amendments would also reallocate ARPA (American Rescue Plan Act) funding to recent projects, revise pension expense estimates and remove a roundabout-related capital outlay that will not begin this fiscal year. Staff said they will return a resolution for formal approval at the next council meeting.

Ending: Commissioners asked for further details and were told the amendments will be presented as a resolution for approval next week; staff indicated more amendments will likely be needed later in the fiscal year as projects and debt payments evolve.