City manager says Milford utility funds subsidized; rate increases and transfers proposed in budget workshop
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Summary
At an Oct. 21 Committee of the Whole meeting, Milford staff presented a rate study and updated budgets showing the city subsidizes water and sewer operations and that a 20% sewer increase still leaves an estimated shortfall of about $20,000.
City staff told council Oct. 21 that Milford’s water and sewer operations are currently subsidized by the general fund and that without changes the utility funds will remain unable to support needed capital work. The city manager said the city will subsidize water and sewer by about $700,000 in the coming year under current projections.
To address the imbalance, staff presented updated rate tables and a scenario that includes a 20% sewer-rate increase per the rate study. Even with that 20% increase, the sewer model showed a remaining shortfall of about $20,000 when compared to projected expenses. That shortfall is partly offset in the model by planned transfers and by drawing down prior sewer-capital balances.
Staff explained that the city has budgeted grant reimbursements tied to the Wallace Avenue water tower and that the timing of reimbursements affects cash flow and transfers between funds. Approximately $600,000 remains in the water-tower fund and could be available to transfer back to the general fund depending on how invoices and reimbursements are processed; staff said using those funds for utility transfers would reduce the money available for capital projects next year.
City options discussed included raising rates to reduce subsidies, transferring additional general-fund money to utilities, reducing capital outlays, or a combination of measures. The manager emphasized the "hard decision" facing council to balance affordability and solvency and said council will consider the matter further at a budget workshop scheduled the following Monday.
