City manager lays out utility-rate options; council sets Nov. 18 budget workshop

City Manager Gunderson presented the city's utility rate study and three budget scenarios the council can use to reduce the near-term impact of recommended water and sewer rate increases. He said staff supplied models showing the study's recommended increases and alternative scenarios that included a one-time transfer to the water and sewer funds to blunt residents' bills.

Gunderson told council that a one-time transfer of $500,000 to both water and sewer would lower the modeled percentage increases — for example, reducing an illustrative 20% increase to roughly a 10% increase in the first year in the packet's scenarios. He said staff also modeled a $1 million one-time transfer to show the effect of a larger subsidy but did not advocate for that option because it would substantially reduce general fund reserves.

Gunderson cautioned that money transferred into utility funds becomes restricted and cannot easily be returned to the general fund. "If we transfer these funds, they become restricted," he said, and noted the city could be exposed if an unexpected general-fund emergency arises. He also said the city would be closer to meeting GFOA reserve guidance with larger reserves and gave an approximate figure during discussion, noting the city's current reserves fall short of the suggested level.

Councilmembers asked for more detailed numbers and requested additional time to review the packet's spreadsheets, including the bimonthly dollar impact shown on the last sheet. Councilmember Parrish said he would dig into the figures and bring follow-up questions.

To continue deliberations, council voted to schedule a budget workshop for Nov. 18 beginning at 5:30 p.m., immediately before the regular council meeting. The motion passed on a voice vote.