Finance commission flags declining water operations fund; asks staff for five-year rate pro forma

City finance staff told the Finance Commission that the water operations fund balance has decreased every year since 2022 and recommended the commission consider rate changes and structural fixes to make the enterprise fund sustainable.

Mark, the finance director, reported that although the city increased invested balances in Star Ohio (from $4,997,831 in March 2025 to $7,487,033 in March 2026), the water operations fund itself is drawing down. He said a modest rate increase—"let's try 3% this year"—could generate about $50,000 in revenue and provide near-term relief while staff prepare longer-range projections.

Commissioners discussed options such as implementing a modest annual escalator tied to inflation (CPI), converting tap fees and some impact fees to a per-billable-unit basis to improve equity, and the legal nexus required for some impact-fee approaches. Staff noted transfers from water capital to operations have helped the short-term balance but will not solve a recurring operating shortfall without either revenue increases or structural changes.

The commission asked staff to return before the budget cycle with a set of formal rate options and a five-year pro forma showing projected balances under different scenarios (including escalators and the proposed PAS fee), so council has concrete choices during budget deliberations.

Staff also highlighted other funds for attention—street maintenance and reserve-policy work—and the commission agreed to prioritize reserve-policy refinements at an upcoming meeting.

The commission did not adopt a final water-rate ordinance; it requested additional analysis and multiple options for council consideration.