City reports structural general‑fund gap and requests affirmation of scheduled utility rate increases

City staff presented a biennial budget overview and a separate update on water, wastewater and solid‑waste funds at the June 10 Lincoln City Council meeting, reporting a structural general‑fund gap of about $3.6 million over the two‑year budget period and asking council to reaffirm scheduled utility rate increases.

The staff presentation noted the city had intentionally drawn down an unusually large general‑fund balance to restore staff and services after an extended period of belt‑tightening during and after the recession. Staff said the remaining structural deficit — $3.6 million over the two‑year budget — includes both one‑time project costs and ongoing operating expenses. A major component of the shortfall is a planned $2 million transfer over two years to support Landscaping and Lighting District (LAD) maintenance previously subsidized by the general fund.

Utility funds and rates Finance and utility staff summarized the municipality’s three enterprise funds and the five‑year rate plan the council adopted previously. Staff said the earlier rate‑setting included a large initial correction (one year with higher increases: 84% for water in the first year previously adopted) followed by normalized annual increases (roughly 3% water, 4% sewer and 13% garbage in later years). Staff said the current proposal is to proceed with the scheduled FY 2025–26 increases, which would result in an estimated $10 per month increase for an average usage customer depending on usage tier.

Nut graf: Staff described the utilities as financially stable following the rate adjustments but noted ongoing capital needs — citywide water and sewer infrastructure totals hundreds of miles of pipe and will require multi‑year planning and investment. Staff recommended the council reaffirm the programmed rate adjustments for July and proceed with a new rate study before the end of the current rate cycle to inform future years.

Reserves and long‑term planning Council and staff discussed the city’s reserve policy. The council had previously directed staff to maintain a 25% general‑fund reserve; members debated lowering the target to 20% for the coming budget to provide additional flexibility for one‑time needs while continuing to protect the city against unexpected shocks. Staff said they will present a final recommendation with the budget adoption and noted an upcoming water and sewer master‑plan process that will inform the next rate study and capital‑improvement prioritization.

Questions and public comment Council members and staff discussed the timing of peak traffic and school dismissal impacts related to other agenda items and reviewed the sources of general‑fund revenue: property tax represented about 57% of current general‑fund revenue and sales tax roughly 21%, figures staff used to explain why diversification is limited and why the city relies heavily on property tax revenues. A Zoom commenter asked about a jump in city attorney office costs; staff explained that the increase reflected added legal staffing and code enforcement functions.

Ending Staff said the proposed FY 2025–27 budget will be returned with more detail at upcoming meetings and that staff will implement the scheduled utility rate increases unless council directs otherwise. Councilmembers urged continued focus on long‑range planning, infrastructure master planning and community outreach for any future major revenue or assessment changes.